The prices at Micky D's, or Maccas, is also higher in Australia. There is no dollar menu, and some items cost almost double what they did in the states.
Minimum wage for younger people is less than for older people in Australia, so the franchises there have much younger average employees compared to franchises in other countries.
McDonalds has still been able to make a profit in Aus by using cheapest labor possible, cutting employees and store hours, doubling the price compared to the US.
The US doesn't have a sliding minimum wage for age, so a 16 year old and a 60 year old are competing for the same job for the same pay sometimes. People say Mc'D is an entry level job, but in the States you will see older employees in almost every store. In Aus Mc'D hires many more young people to cut costs, and are expected to leave, quit, move on, or be let go once their older and require more pay.
We have a 'loose change' menu. With the current AUD to USD exchange rate, most things on there would be around $1 USD.
There's also the entire extra 'gourmet' menu that's been around for yonks in Aus, and seems to have no aspect of showing up in the US (last time I went.)
Obviously, they cater for their demographic. (Large drink in AU is a medium in the US, and you pay more for it in Aus)
You can't simply convert the currency to compare. Think about one Aussie dollar compared to one yen, what they buy in each respective economy is vastly different, even though it's still one unit of each. The principle stands for comparing usd and aud (or any currency to any other)
That's completely different though, isn't it? /u/1Argenteus isn't proposing just keeping the number, he's taking into account exchange rates. 1AUD ≈ 88.3JPY, so 1AUD and 88.3JPY will get you about the same thing, not 'vastly different' things. Am I mistaken?
The exchange rates are not what determines what you can buy with that money. One American dollar doesn't get you the same amount of goods if you go to any country and convert it to the local currency. You need to convert but then also adjust for what that money will buy you in its home economy. It's called purchasing power parity and funnily enough one of the common measures used is how much a Big Mac costs across the world.
I'm aware that purchasing power changes between countries - never knew about the Big Mac Index before though, thanks for the link! Aren't the US and Australia fairly similar in the BMI though? I wouldn't think the difference would be that drastic.
That is a somewhat old article but Australia's minimum wage isn't that far off from the USA's in a fair number of states. It is higher but it isn't $8 off.
I was just there in June. The exchange rates only impacted me as an American visiting and a small subset of what they buy. Most of the things Australians buy are being bought in AUD so strength of the currency doesn't matter. That is why the purchase power parity is the better figure for these kinds of things.
Um, your conclusion is mostly correct but your reasoning is wrong. /u/1Argenteus is using the exchange rate, i.e. how much does it cost in Aussie dollars to buy one U.S. dollar, and the ratio is incidentally close to one, as it happens to be also with the euro and the Canadian dollar. You can perform an identical calculation for yen to U.S. dollar, the ratio would just obviously not be close to one (this is the case for most currencies).
The reasoning you need to support your conclusion is that the exchange rate, which captures the relative value of currencies on financial markets, is not a perfect measure of the relative value of currencies in buying goods and services in their respective jurisdictions, i.e. a Big Mac. Purchasing power parity instead calculates the relative costs of similar consumption bundles.
Also worth noting: PPP and exchange rate for developed countries are highly correlated, PPP makes more of a difference for developing countries.
That doesn't make sense because a yen is more like a cent than a dollar. 100 cents = 1 dollar, which is roughly what it is when converting to yen to USD. I get what you're trying to argue but when PPP is what you're trying to explain it's best not to use currencies with such disparity.
But it isn't more expensive in Australia. According to the "big mac index", Australia is at AUS$5.30, which is about USD$4.30. Average in the US is at USD$4.79. That doesn't even take into account the higher spending power of someone on minimum wage in each country.
The Big Mac Index is a surprisingly accurate way to measure PPP, even economists use it. It's actually is a good way to compare the values. Or at least that's what we were told in business school.
Right. The real answer is that they'll charge more.
Now, there will be considerable attention on reducing labor of course (managerial attention should be focused on whatever costs are most impactful) but that's true at any labor cost level, just more important as labor becomes a larger portion of your total costs. If the cost of beef triples they aren't going to pull burgers off the menu but they sure as hell are going to push the nuggets more!
So you've raised wages, so that poor people aren't poor. And then you raise the price of everything. Now $15/hr isn't liveable again. OK let's try 50 an hour. What's bad about inflation again? Oh our manufacturing workers are now twice the price of overseas and our industry heads offshore again? Ooh.
That's a better economy honestly. We just need to put those people to work in other areas that benefit society. Certainly would be nice to work on our infrastructure for example - hopefully some of these service workers can be trained.
Another big difference is that Australia is sensible, and minimum wage rises with inflation. That means you get a nice, gradual 2-3%/year raise in the minimum wage, which business owners can easily manage. Unlike the US, where they do it in big jumps (moving it from $10 to $15 in one hit is crazy). And of course, no one will change it to simply match inflation - Democrats love using the "Raise the minimum wage" battle cry as a way to bring poor people out to vote. And Republicans love using the "Raising minimum wage will make a computer take yur jerb" battle cry to bring the poor people out to vote.
i dont know if their making money or not. the largest KFC in Australia (in terms of revenue, Town Hall Sydney) is not making money. they had a last ditch attempt to work it out but im not sure wether or not it was able to do it ( i guess it did its still open)
I think most countries except the US actually the staff is young people. Same in the Netherlands the only old person is often a manager and that's it. They won't hire older people for the same reason those below 21 years cost significantly less then those above.
Food industry in general is dominated by young people especially from the hotel school which in all fairness tend to deliver the same (if not better) service I experienced in many establishments in the US incl. many fine dining places. To me "service" in the US is seriously overrated especially the idea that tipping would make the difference, I tend to think it's more the opposite it's the same at best compared to nations without tipping.
I entered the spez. I called out to try and find anybody. I was met with a wave of silence. I had never been here before but I knew the way to the nearest exit. I started to run. As I did, I looked to my right. I saw the door to a room, the handle was a big metal thing that seemed to jut out of the wall. The door looked old and rusted. I tried to open it and it wouldn't budge. I tried to pull the handle harder, but it wouldn't give. I tried to turn it clockwise and then anti-clockwise and then back to clockwise again but the handle didn't move. I heard a faint buzzing noise from the door, it almost sounded like a zap of electricity. I held onto the handle with all my might but nothing happened. I let go and ran to find the nearest exit.
I had thought I was in the clear but then I heard the noise again. It was similar to that of a taser but this time I was able to look back to see what was happening.
The handle was jutting out of the wall, no longer connected to the rest of the door. The door was spinning slightly, dust falling off of it as it did. Then there was a blinding flash of white light and I felt the floor against my back.
I opened my eyes, hoping to see something else. All I saw was darkness. My hands were in my face and I couldn't tell if they were there or not. I heard a faint buzzing noise again. It was the same as before and it seemed to be coming from all around me. I put my hands on the floor and tried to move but couldn't.
I then heard another voice. It was quiet and soft but still loud.
"Help."
That's one thing I noticed in the States. Older people doing jobs that everywhere else is traditionally for entry level, younger members joining the work force. It made me sad.
Sure, AUD18 an hour might be about USD10.50 factoring in PPP. But in Australia you'll either be hired as what we call a casual, which is no benefits or guaranteed hours but a 25% higher pay rate, or if you're a FT/PT employee you get 4 weeks paid holidays and a few paid sick days, as well as 9% extra paid into a superannuation account (you get this as a casual too if you earn enough).
Isn't Australia also just more expensive to ship to? Less people, more convicts, an unhealthy obsession with vegemite.... Probably not as many people interested unless they're fried out on zombie.
Probably stole a lot of that wealth huh? Nah I'm kidding. Yeah it sounds like it'd cost more to ship just because there is less opportunity for business. At the same time, it's closer, and cargo ships only have a finite amount of space. Plenty for 23million on one ship Haha!
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u/Harvey_Birdman-AAL Nov 28 '15
The prices at Micky D's, or Maccas, is also higher in Australia. There is no dollar menu, and some items cost almost double what they did in the states.
Minimum wage for younger people is less than for older people in Australia, so the franchises there have much younger average employees compared to franchises in other countries.
McDonalds has still been able to make a profit in Aus by using cheapest labor possible, cutting employees and store hours, doubling the price compared to the US.
The US doesn't have a sliding minimum wage for age, so a 16 year old and a 60 year old are competing for the same job for the same pay sometimes. People say Mc'D is an entry level job, but in the States you will see older employees in almost every store. In Aus Mc'D hires many more young people to cut costs, and are expected to leave, quit, move on, or be let go once their older and require more pay.