the average income statement of McD. The crew - 20% Food - 30% Profit - 5.7% If you increase salary by 50%, or ~100% in the case of $15/hour, where would you get the money?
If all other costs stay the same(it doesn't) and you increase food costs by 10% while not loosing any sales(it doesn't). You can only increase the crew's salary by ~15%. If McD could raise the prices by 10% and keep it's sales volume. Don't you think they would have already done that can pocketed the money?
That would depend on the degree of the increase as well as the length of its implementation. Companies hire unskilled workers for minimum wage jobs b/c they are the cheapest source of labor. However, if minimum wage rises to the point that it is no longer the cheapest source of labor, then companies will find an alternative. And when that happens, you'll see higher unemployment numbers. Common sense, right?
lets go back, what is 20% in the case of crew expense? is it 20% of revenue or 20% of total expenses?
very simple math if sales is 100K and crew is 20K and net profit is 5K then if i increase sales to 110K i can increase crew to 30K and i still get 5k in net profit. that's a 50% in crew my other costs remain 75k.
I'm not completely disregarding you but it doesn't have much practicality in the real world. It is also misleading to say Americans are more and more educated. In terms of getting degrees, yes, but curricula has been dumbed down dramatically it is hardly worth the papers they are printed on. It's just the sad reality.
So... you think you can increase sales from 100K to 110K just from increasing prices? Like I said before, if McD can increase their sales by increasing the price of goods, why would they not already to it and pocket the difference?
Ask yourself one question: has this ever been the case? Even assuming the law plainly said that on its face, it still is no guarantee that those will be the ultimate effects. In fact, a law could even have contrary effects and still be deemed good law. Sometimes life just 'tain't fair.
In my scenario the restaurant actually makes more money. So there is leeway for the profit margin to go down.
You should do a paid training program for restaurateurs on how to make more money. Increase price of goods sold.
Sure. More like a 10-15% increase. But given that fast food is an incredibly elastic good with small margins of profits, 10-15% is a big deal.
An increase in minimum wage would require all employers to increase wages. People will continue eating big macs
They are going up now because of a general increase in the price of food products overall. What you are suggesting is compounding that with an increase in the cost of labor. At some level of price increase, you close the price gap between fast food and some higher quality options. At that point, market share will be lost to the better options. Do I want a McDonald's meal at $8.00 or spend an extra dollar and go to the Tex Mex place down the street? That is a question that certainly could arise at some point.
Or they can just not eat out at all, which is the indication of this study as well as numerous others I can find. Fast food is price elastic, this is a well known fact. Can you provide evidence indicating otherwise?