Benefit costs typically are a higher percentage as wages go up. Thus simply counting them as if they were wages actually improves your position.
It's better to be evidence-based FIRST and sanity check second...not sanity presume first and fail to look up numbers second. Sorry, I am not trying to be a jerk here. Take a look at some links.
McDonald's spends 24% of revenue on salary and benefits. Health benefits and bonuses are not wages. So wages are quite a bit less than 24% of revenue. Besides, some employees are management whose wage >> $20/hr and have other benefits. Imagine management is 10% of employees but in benefits and wage makes 4x as min wage employees. That's significant portion. Also, I deliberately put the number at min wage of $15.50. Many employees make $16 or $16.25 or $16.50. I was deliberately being conservative, adding a big cushion. To show even when making large impactful (counterfactual) assumptions in McDonald's favor, they'd still only have to increase price a small amount.
Ok, you raised the profit from 1% to 2%. Either way, you still ensure no more McDs open up and the more marginal ones close.
I do agree they can react by raising prices--but in the long run that simply leads to inflation and puts things back where they were.
Why? They can't take the money.Loren Pechtel said:(labor/plant/materials/profit) distribution. 30% increase in the 30% bucket is 9%. Now you have 39/30/30/1. You basically killed their whole profit.
There's also royalty to global McDonald's which is 5% of sales:
You can add that to profit bucket.
Agreed--but that would happen even without raising wages.Loren Pechtel said:You can't dump this on "productivity improvements", that would have been done anyway.
They are accelerating that. Derec says more kiosks.