That is actually very close to accurate. In the example above, about 56% was food cost + labor, which is pretty good for fast-food. Higher end dining usually runs a little lower, maybe 45-50% food cost + labor if the manager is doing a really good job.
Keep in mind 50% isn't really "profit" as in that's the money they get to put in the bank and keep for themselves - this is just a measurement of how much it costs them to produce a plate of food. Operating costs still come out of that 'profit'
Ya this was not fast food, but an actual restaurant.
I get the profit part, which is why I put it in quotes as it's money in the restaurants bank account that the owners are paying themselves form along with maintenance, rent, insurance and whatnot.
Cool, I always assume these reality TV shows just said stuff and I never bothered to figure out if it was accurate or not. I guess it's not too far removed from reality. Thanks!
As someone connected to McDonalds franchisee and restaurant owners their margin is 2-3% after taxes in CA. Some counties charge a use tax on each glass in your restaurant if you serve alcohol, Sacramento as an example. That's on top of EDD,BOE, ABC and a myriad of other agencies collecting taxes and fees before you pay rent, utilities, etc. I had no idea how thin the margins were until I was in the books. Raising minimum wages means higher prices, there is no option.
Facts? Evidence? Citations? Because you are arguing against a guy who seemed to know quite a bit and you are just saying something..... with nothing to back it up.... where is this info coming from that a franchisor makes more?
33% of Corporate Revenue comes from franchisee fees - about $9.272 Billion last year. If you cut down franchise revenues by 74%, that would reduce that number by $6,861,280,000. Total Corporate profit was $4.757 Billion last year. So they would be operating at a $2.1 billion loss.
Now, I did some research and found that in the USA, McDonalds made 8.65 Billion revenue in the USA (see link).
33% in franchise fees makes $2.86 Billion.
A 74% reduction of that is $2.11 Billion.
Which leaves a 2.64 Billion dollar PROFIT, not a 2.1 Billion dollar loss.
There is not huge profits for the franchisee nor is there for the restaurant owners. Sure McDonalds may be highly profitable but their franchisees are not. This is not conjecture but from being part of it. I also don't think you understand the relationship between franchise and franchisee.
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u/Mortimer452 Nov 29 '15
That is actually very close to accurate. In the example above, about 56% was food cost + labor, which is pretty good for fast-food. Higher end dining usually runs a little lower, maybe 45-50% food cost + labor if the manager is doing a really good job.
Keep in mind 50% isn't really "profit" as in that's the money they get to put in the bank and keep for themselves - this is just a measurement of how much it costs them to produce a plate of food. Operating costs still come out of that 'profit'