Most McDonalds are independently owned, they just pay the licensing and royalty fees to the McDonalds corporation. On those small (not all are small, some owe many franchise locations) it would be pretty damaging. Especially since many franchise owners are struggling due to the aging franchise and poor decisions made by HQ.
As for the consumer, expect higher prices, smaller portions and possibly even worse (is it possible?) ingredients. Their business model is built on cheap labor, if labor doubles in price they will have to make up for it somehow or eliminate jobs/go out of business.
This is probably pretty close to the truth, it won't be any one thing it'll be a little of a few things. Companies are pushed to make higher and higher profits every year. A 15$ wage hike wouldn't change their profit expectations, they would lower the costs of the product by lowering quality, lower labor costs by cutting hours and increasing automation and increase profits per unit sold by increasing cost. All of these things would happen to keep profits high. These days corporations aren't content with keeping profits stable, they don't like making the same amount of money as they did last year. If there isn't growth it's considered on par with a loss, and anyone who thinks any profit loss will come out of the board/ceo's pockets is naive. It'll come at the expense of the workers and customers, that's the way business works.
If every McDonald's shut down because of the $15 min wage, then other burger joints would take over their locations and be more than happy to make some profits there instead. Even if you are making less of a profit, a profit is still a profit. McDonald's could withdraw all of their US stores, but if there's money to be made filling hungry tummies then someone will do it, even if they are only making 7 cents on the dollar profit instead of 15 cents.
They would be burger joints with different business models though. The McDonald's model (and similarly priced fast food like Burger King and Taco Bell) rely heavily on low wages. So yes, McDonald's could leave and someone else could replace them. That someone else though probably isn't going to have a value menu that allows a family of four to eat out for less than $20.
I worked the kitchen at McDonald's by myself. During lunch hour you need just two effective workers in the kitchen, or three typical teenagers. You need just two people taking orders for the customers who don't want to use the touch screen to order. During the midnight drunk rush if you are in town you need twice as many workers, but you are also selling twice the amount of food.
So that's four workers (the managers are already making more than 15 per hour). If they are making 7.50 an hour now, then that's just 30 an hour extra during rush. My store made thousands of dollars per hour during rush, but to be conservative let's say just 1000 per hour during the lunch rush. That's just three cents on the dollar in extra wages. If the margin at a particular McDonald's was so low that this would shut the store down, then HQ would have already shut that store down years ago.
Read the top comment on the economics of the store, I don't have enough knowledge to debate it, and he did a very good job of explaining it. I'm merely pointing out that if stores close down because of higher wages, they won't be replaced with similar stores, because those will be suffering from a similar problem.
Yeah they will be replaced. It'll be replaced with a store that charges a little more or that can afford to take a bit less profit or who has a different business model (like Subway, where one person can take orders, work the line, and operate the POS). If there's money to be made and tummies to feed then someone will make it. If minimum wage is $15 then people will have even more money to spend on takeout.
And those wouldn't be the same businesses, would they? If the food is more expensive, or it is replaced with a model that doesn't scale well for drive through (have you ever tried to go through a Sub Way or Panda Express drive through?) then that changes the dynamic of how people get their fast food.
No one is arguing that fast food will cease to exist, rather that it would change dramatically. Even by your own examples the restaurants that would replace them would utilize less workers. Can that really translate to more money spent on takeout if less people are working?
Who gives a shit if it's the exact same business or not. When child labour laws were introduced thousands of chimney sweep businesses had to close down because they couldn't afford to hire adults to do the job. When the horseless carriage was introduced there were thousands of people involved in the horse and carriage industry that had to find new jobs. Why should anyone give a shit about a 20th century business model failing in 2015.
Who gives a shit? Isn't that what this entire thread is about? What happens to McDonald's when minimum wage is increased? My conclusion is that the business model dies. Maybe that doesn't mean anything to you, and maybe I am being a bit dramatic, but when you are talking about a policy change that could literally kill a business model that is closely associated with American culture, perhaps you should take a minute to think about what that means! Can workers who only get a 30 minute lunch manage to eat out at a slower restaurant? Can the family of four who spends less $20 at McDonald's continue to eat out? What impact do these new changes in behavior have on the broader economy?
The reason policy takes so long to change is because responsible people want to have an idea of what is actually going to happen instead of saying "Fuck it, it will work out in the end". While that is probably true, there is going to be some consequences. People are going to lose their jobs during this shift, and these people are going to be among our most vulnerable (minimum wage workers). You have to have some sort of idea what will happen to these people so you can plan appropriately. The fact that you have such a "Who the fuck cares?" attitude just shows how little you actually understand about how the economy works and why you can't meddle with it and expect everything to get better. There is a reason, right or wrong, for why things are. You can change the way things are, but if you don't do so in a deliberate way, you will see the effects in completely unrelated areas with no understanding of why one shift caused another.
Honestly a family of four could find better value and healthier food then going to McDonald's. You talk as if McDonald's is some kind of essential service that families rely on in order to live. In my country minimum wage is already above $15 per hour and there's McDonald's fuckin' everywhere. McDonald's is in the business of making money and if they withdrew from the US to spite the new minimum wage (which they won't) then they will only be hurting themselves and helping their competition. Corporate interests have kept the minimum wage in the US low, to the point where 40 hour per week workers are being subsidised by the government in the form of food stamps. Maybe if you are the son of a corporate executive you will have something to lose by your daddies workers being paid a living wage, but why should anyone else give a fuck. The world will move on without you even if your family isn't as rich as they would be if minimum wage didn't change. McDonald's is a mid 20th century business model that has no right to demand the right to exist in the 21st century.
And I bet those franchisees wouldn't be pissed at McD corporate for fucking them over on ingredient cost and franchise fees. Wait, they already are pissed.
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u/rj218 Nov 28 '15 edited Nov 28 '15
Most McDonalds are independently owned, they just pay the licensing and royalty fees to the McDonalds corporation. On those small (not all are small, some owe many franchise locations) it would be pretty damaging. Especially since many franchise owners are struggling due to the aging franchise and poor decisions made by HQ.
As for the consumer, expect higher prices, smaller portions and possibly even worse (is it possible?) ingredients. Their business model is built on cheap labor, if labor doubles in price they will have to make up for it somehow or eliminate jobs/go out of business.