Seeking Alpha

Restaurant industry on watch with labor getting unruly

  • Fast food workers aren't likely to see a broad increase in their wages to $15 per hour, but the heightened calls for unionization and focus on benefits could be drag on the sector in the future.
  • Economists say a raise in the minimum wage to $10.50 per hour would increase restaurant expenses by 2.7% which could be passed on with higher menu prices. The trick is in a promotional environment, and with more menus tied to value, the pass-through to consumers might not be smooth as academics forecast.
  • On watch: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SONC, WEN, BKW, DENN,KKD, IRG, DIN.
Comments (33)
  • Imagine...unions being bad for business.
    29 Aug 2013, 10:51 AM Reply Like
  • I mean really, can anyone argue that boosting the price of a fast food meal by a dime to make the lives of 100s of thousands of marginalized Americans a LOT better is not a good idea? How selfish have we become?
    29 Aug 2013, 10:51 AM Reply Like
  • Yeah, I know, it is so galling that every working American won't gift me a single dollar so I can be worth over a hundred million dollars. Think of how little they need to sacrifice to give me the life of Reilly. Utterly selfish that we would like to pay people a low wage for a job that high schoolers can do without any skill. Clearly the only career aspirations for someone is to be a cashier at McDonalds.
    29 Aug 2013, 11:01 AM Reply Like
  • @ Grant -
    Basically a brilliant post
    29 Aug 2013, 11:07 AM Reply Like
  • Sorry you are so busted Grant. Email me your address and I will mail you a dime so you can afford a meal at McD. Hey, you only need 299 million more people like me!
    29 Aug 2013, 11:07 AM Reply Like
  • Uh, no...actually we don't need ANY people like you here at SA. If you want to do charity, feel free to do so and we will even reward you with a tax deduction in addition to whatever psychic income you garner (and, who knows, maybe even some spiffed up credentials at the pearly gates). But please do not delude yourself in thinking that you get any credit, here on earth or when you meet your maker, for what you EXTORT from others. Doing charity on a grand scale with other people's money is simply rationalizing away your own selfishness.

     

    If you want to raise wages above what the market supports, you may open your own restaurant and pay the staff whatever you think fit and proper. Needless to say, by compounding the problems in an already dicey sector of the economy, we will not likely find your restaurant a viable investment. Perhaps you have confused SA with Salon and should peddle your business scheme there (where you will find a more gullible audience).
    29 Aug 2013, 11:29 AM Reply Like
  • What about me? don't be so selfish and greedy... please gift me $1 too along with Grant. I like to enjoy the finer things in life too. When working Americans make thousands of dollars every year, what's $2?
    29 Aug 2013, 11:31 AM Reply Like
  • Actually, I said I would send him a dime, as a 2.7% increase in his Happy Meal would cost him a dime. I will send you one too. Email me your address.

     

    Matthew 25:31-46
    29 Aug 2013, 12:11 PM Reply Like
  • I do not think your math will add up to enough to pull this idea off. I wonder if you have ever owned a company with employees.
    29 Aug 2013, 12:25 PM Reply Like
  • Thank you for reminding us that our financial and life decision should be based on Biblical truths. I also am a believer.
    I believe all people should enable themselves and their children to earn a decent living. Earn it, not be given it.
    What is going to happen with the wage scale for those who do work extremely hard (the ditch diggers), those who got an education... are they going to go from making, say, $15 per hour to making $24 per hour?
    I am concerned about the balance.
    Proverbs 14:23
    I try to be a Proverbs 31 gal myself. (including verse 20)
    29 Aug 2013, 02:10 PM Reply Like
  • $15/hour? Okay, if restaurant workers, many without a college degree, get $15/hour, then university research jobs should pay more than $15/hour. Currently it is about $10/hour unless you are a grad student, who also grade papers and tutor.
    29 Aug 2013, 11:20 AM Reply Like
  • And while we are on the subject of distorted values, how about sports stars collecting $50 to $100 million a year?

     

    Can't they live well and send their kids to college on a couple-hundred thou per year?

     

    We'd all might benefit from lower ticket and parking costs. Win-win.

     

    Something is really in need of repair.

     

    -rwm
    29 Aug 2013, 11:30 AM Reply Like
  • "We'd all might benefit from lower ticket and parking costs. Win-win."

     

    if by that you mean the owners profit and continue to price parking and tickets at an amount the market will bear, then yes
    29 Aug 2013, 04:36 PM Reply Like
  • $15/hour for a cashier is a bit much. I see entry level tech jobs at that pay.

     

    I have a question... Are they talking about $15/hour across the country? Or in more expensive areas? There are huge differences in different areas of the country.
    29 Aug 2013, 11:48 AM Reply Like
  • This is what happens when portfolio managers chant, "we can't let moral values cloud our thinking".

     

    When a vast and growing share of Americans are reduced to poverty wages while owners make billions, investing in the companies that profit most from this inequity is bound to come back and bite one in the ass--before ripping out bowels and viscera. Do so at your peril.
    29 Aug 2013, 12:01 PM Reply Like
  • eh, Grant's comment is spot on, but besides the satire, there are real issues here:

     

    1) Chances are fast food works in large metro areas (Manhattan, for example) are probably making more than minimum wage right now anyway... that helps to retain employees

     

    2) If worst comes to worst, and the minimum wages increases by, say, 50%, some in the industry will be harder hit than others.

     

    3) An incentive plan should be in place for conscientious employees from the local franchise, i.e. year end bonus based on increased volume year over year. That is probably more viable the raising the minimum wage
    29 Aug 2013, 12:16 PM Reply Like
  • 3) An incentive plan should be in place for conscientious employees from the local franchise, i.e. year end bonus based on increased volume year over year. That is probably more viable the raising the minimum wage

     

    Actually, something like this may teach employees the value of their wages. An employee bonus plan based on a % of the increased revenue or profit of a local franchise. It may be a small amount, but at least the employees will learn what it takes to maintain and grow a local franchise.
    29 Aug 2013, 12:51 PM Reply Like
  • That is a great thought. I hope some do and more will follow.
    29 Aug 2013, 02:16 PM Reply Like
  • Anyone taking a job in fast food should know that it is an entry level job, not to be your life time job. Education is the solution. Few sets of parents with little education will be able to support all the needs of a family. Fast food should be the beginning of your work history, not your one and only job. Those who want high paying jobs need to get the education that supports such a job.
    29 Aug 2013, 12:19 PM Reply Like
  • Unfortunately with the breakdown of family as a fundamental unit of society, teenagers no longer have wiser role model figures to guide and council them towards the larger picture in life.... it's all about the here and now. This started more than 30 to 40 years ago - very slowly and it's only going to compound and get worse.

     

    The family unit used to be the ultimate safety net. Disciplined you when you needed to, guided you when didn't know better and helped you financially when you were broke till you got another job. How would you know this? Just look at households where the concept and relations in families are taken seriously.

     

    In this new age of utopia, the responsibility of family is left to the government and it's fine for people to do whatever they want.... as if there won't be consequences. It's only going to get worse when these kids grow up with an idealistic entitlement mentality and are clueless about the realities of life.
    29 Aug 2013, 12:36 PM Reply Like
  • You get paid what you are worth, not what you think you deserve.
    Life is hard, wear a helmet.
    29 Aug 2013, 12:51 PM Reply Like
  • congrats to all the non libs posting here who understand it is more than feeling good. if you don't like the pay, please don't work there, improve yourself so you can be better. it is your responsibility not the owner.
    29 Aug 2013, 02:35 PM Reply Like
  • nobody can argue the fact wages=profits. the proposed minimum wage of $11 accounts for fact that wages have not risen for more than a decade net inflation. So they got two record tax cuts equal to 2/3 of all debt owed by USA.

     

    Corporations and rich demand tax cuts because they promised that will yield huge job growth. No job growth. Wage level drop for the first time in history, for a decade now. Meanwhile socialist Germany's workers with universal healthcare half our cost got wages that rose 3X faster than USA.

     

    What the market will afford is the rich getting richer and poor getting poorer and the middle class getting squeezed. http://on.fb.me/188gHeL

     

    Only status quo huggers would believe the rich media talking heads on tv getting paid by ultra rich millionaires to tell middle class folks that it's all the poor people's fault. That the poor are power grubbers and the rich are powerless. Up is down.

     

    In 1949, President Truman ignored the doubters and pushed Congress to nearly DOUBLE the minimum wage, from 40 cents an hour to 75 cents, which is roughly the equivalent of a wage today jumping to $13.59/hour from the current $7.25. Lobbyists screamed that prices would skyrocket and hiring would grind to a halt. Of course, none of that actually happened after they raised it. Keep that in mind as you witness the hysterical right-wing opposition to raising the minimum wage today.
    29 Aug 2013, 05:33 PM Reply Like
  • Lobbyists screamed that prices would skyrocket and hiring would grind to a halt. Of course, none of that actually happened after they raised it.
    ---------------------
    You haven't been paying attention....or is your grasp of "after" measured in nanoseconds? It has all...the inflation and the un/under employment...come to pass and even worse. And you probably have no idea what today's dollar is worth in purchasing power compared with 1949. You are like the frog who tolerates slowly but steadily being boiled to death whereas he would instantly recognize and escape from being plunged into boiling water.
    30 Aug 2013, 12:05 PM Reply Like
  • For those of you dogma rich and math poor types, here are the facts and figures of the matter visualized for your benefit. http://on.fb.me/15BPLW4

     

    CEO pay has skyrocketed 300%+ since 1990. Corporate profits have doubled. Average "production worker" pay has increased 4%. The minimum wage turned almost negative 10%. (All numbers adjusted for inflation). There's no other place in the world where CEOs get paid 300% more is an acceptable norm. Blame Clinton for taxing salaries and incenting paper wealth incentives. No CEO especially those that screw up companies and get 100X golden parachutes deserve that kind of payout ntm tax cuts paid by credit card to China.

     

    Value system check time.
    29 Aug 2013, 05:37 PM Reply Like
  • And I daresay how many of you are investing and priming the pump at SA because your salary keeps getting 3% raises annually barely keeping up with inflation. Ding burger workers all you want if it makes you feel better about your small-minded self, you're still getting screwed by special interest loopholes for the ultra rich just the same. That the 4 Walton kids own as much wealth as the bottom 40% of this country - ridonkulously undeserved
    29 Aug 2013, 05:39 PM Reply Like
  • Here's a video related to what awakinwa is saying...

     

    Wealth Inequality in America
    http://bit.ly/188jCUE
    29 Aug 2013, 05:51 PM Reply Like
  • The bottom line is you get what you pay for. If you don't think wage increases are feasible then you shouldn't be too surprised when they put pickles AND onions on your ketchup only cheeseburger. I bet $15/HR employee wouldn't make that mistake. I would be willing to guess that the 15/ HR wage is the start high price then negotiate down to something like $9.85.
    29 Aug 2013, 10:22 PM Reply Like
  • The liberal pap in some of the comments is disturbing. One would expect a bit more understanding in financially savvy SA readers. There is no correlation between the minimum wage earner and the ultra-wealthy. The guy who owns the MCD franchise, or whatever, has probably stretched himself to own it. He is entitled to make a profit, right? Read the statistics on the number of employees who are teenagers or hold several jobs. Not many are supporting a family of four on that pay. As for the union sponsored picketing, are you stupid enough to believe that is motivated by altruism and not increasing union dues?
    I owned a fast food franchise at one time, and like the guy who buys a boat, my two happiest days were the day I bought it and the day I sold it. Amen.
    30 Aug 2013, 11:26 AM Reply Like
  • Why so outraged that SA readers would believe "liberal pap," Dr Fred?
    Being an investor doesn't mean you check your humanity at the door. In an economy where 70% of sales come from consumers, while automation and outsourcing are killing jobs by the millions, even investors are dependent upon redistribution via policies like livable minimum wages.

     

    I understand your resentment, however. I may have been one of your insufferable fast food franchise employees a few years ago.
    4 Sep 2013, 01:45 PM Reply Like
  • By the same token, being a liberal doesn’t give you a greater claim to ‘humanity’.
    In other words, being generous with other people’s money doesn’t make you charitable.
    4 Sep 2013, 01:52 PM Reply Like
  • We are not talking about franchise owners, they work hard and are not rich. The rich are CEOs making 30 M, or the CEO that gets 400 M severance pay when fired. how many Ms does one person need??
    3 Sep 2013, 11:16 PM Reply Like
  • @Camper I never denigrated my employees by calling them "insufferable". Please don't put words in my mouth. By any chance are you a politician?
    @ Matt Brown- Absolutely love your comment
    @danilll- CEOs are outrageously over paid agree, but who do you think will suffer more, the CEO or the guy who owns the franchise whose customers cannot get access to his business because of rowdy pickets?
    5 Sep 2013, 10:41 AM Reply Like
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