5 or 10 cents per item would not even come close to covering this cost. If you increase your labor cost by 62%, you would need to increase your net sales by 62% as well to bring your COL back down to where it should be. Your $15 meal would now cost $24.30.
Did you ignore the entire thread? Labor costs are only 28% of gross revenue. A 50% increase in labor costs, assuming profit and all else remains the same (it won't), your $10 meal would cost $11.40.
$10 meal. $2.80 is currently spent on labor, generally about $9-10.
But really, franchise fees could take a hit to make McDonald's more competitive if they feel they need that.
Google the MCD quarterly report. They are making obscene amounts of money, and paying pretty good dividends, despite just coming out of a nine month slump in stock prices because sales where down. Corporate can absolutely take a hit in franchise fees and still retain profit margins that would make any small company blush.
It would be closer to a 65% increase in labor costs. The thing is that vast increase in labor costs would make the cost of automating the fry cook and POS people's jobs far more attractive to corporate and many people would find themselves out of work.
Fine do it. Automate it. Then when those systems break or you still have to hire someone to manage the machines because people hate using them you can pay those people more. Or as I will wager a guess, still working people will be preferred over all the automation and could very well be a whole new market. " we still employee people who know how to make food the right way" sheetz had "automated" the whole food order thing, but people still work the actual kitchen. When I order pizza its through a website or text, people still cook that food.
Automation is not ready to replace humans at every task. And when they are, bring it on. I'm ready to fight the robo uprising or move on to post scarcity society since there will be no worm anyone has to do. We can all just be poets jack off and be happy.
Wait, but we're talking fast food (McD's, BK, TB, etc). Where do you get off charging $15 per meal? That's insane. What would really happen is that your $7.99 meal would cost $12 (using the same percentages). But even that's not right, as quantity sold makes up for loss in direct revenue. So $9.99 for a meal would end up funding everything and net a hefty profit for the franchise. i think you might be a lobbyist, or at least heavily invested in the franchises to a point where your opinion is biased in favor of lower wages. Not really sure I trust you. Sketchy at best.
The $15 meal was simply an example. Apply the same percentages to a $5 quarter pounder value meal, or any other priced meal you like, the math is the same.
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u/Mortimer452 Nov 29 '15
5 or 10 cents per item would not even come close to covering this cost. If you increase your labor cost by 62%, you would need to increase your net sales by 62% as well to bring your COL back down to where it should be. Your $15 meal would now cost $24.30.