The problem isn’t what you think. McDonald’s, when it is not being vilified for selling fast food, is being vilified for its wage practices by memes such as this one. About 80% of McDonald’s are franchisees. That means that only 20 percent of McDonald’s are direct owned. Which means that a good amount of that income comes from franchisee payments… Which means it is mostly small businesses that are paying their employees “minimum wage” and paying McDonald’s for the right to use their trademarks and recipes. And if a restaurant through economies of scale / sheer volume manages to make lots of money through small margins, these progressives and their memes can’t seem to fathom that adjusting these small margins substantially would rapidly consume that capital surplus and drive it down in to red, and then insolvency and bankruptcy.
Update: With new technology like this in the works: http://www.americasfreedomfighters.com/2014/08/11/burger-flipping-robot-will-put-fast-food-workers-out-of-a-job/ Such demands like $15 an hour for burger flipping, and possible future modifications to Obamacare (almost double the current rate) could push many franchises (AKA small businesses) operating under the McDonalds, Burger King or Wendy’s brand names towards automation. With the current price of the average McDonald’s employee being 11,670 plus the employer side of the Social Security tax, this robo-cook won’t be too hard of a sell (at the demanded $15 an hour, it would be 22,500 plus SS tax annual for the same individual employee).
Average profit margin per Franchise runs about 10% of sales per Mr. Franchise of Franchise Foundations, a Professional Corp.
From 2013, the gross sales are around 22 billion, after expenses, pre-tax income is 8.2 billion, after US and foreign taxes 5.59 billion. So they actually “made” 5.59 billion, which is considerably less than 22. So do they send the subsidies to the foreign markets? What happens when share holders get jittery over substantially reduced profits and bail?
If domestically, then you have to determine who gets a subsidy and how much wealth to distibute. Also, with the federal minimum wage being 7.25 and state being up to 9.32 as of January, all of those located in those states make more. The crew member hourly average makes $7.78. the national average is above the national minimum wage, with other positions having an $8.13-$9.62 an hour wage, not counting store managers.
Wage information source: http://www.glassdoor.com/Salary/McDonald-s-Salaries-E432.htm
I worked at a McDonalds for a summer job as a crew member between college semesters (a unionized grocery store position didn’t pay any more than McDonald’s did). Many of these positions are high turnover (summer jobs, college jobs, first jobs), low skill positions which, under a free market economy would serve as spring boards and experience builders for new to the job market workers. Under the ever growing weight of the regulation and social welfare and warfare state the economic opportunities to grow are being killed, so the solution is not to compel McDonald’s to pay more, but to liberate the market from the forces of government that are making it ever more difficult to do business. Of course the federal government is not alone in this. State governments have added their own lists to the federal government’s lists, threatening and pressuring faith based businesses to abandon their faith to serve the “moral” imperatives of their state “betters.”
If you want to see people regain the ability to lift themselves up, it is time to get the dead weight of government off of our economy. It is time to end the punitive taxation and onerous regulations crafted in part by so called crony-capitalists to protect their own profits from competition and secure additional profits through tax credits for purchasing their products and state and local mandates to consume their products (think “renewable” energy). Crony capitalism is as much a threat to the free market and to general prosperity as socialism is. It is time to end tax payer subsidization of companies (Think GE) unable to stay afloat and to let the “vultures” of the free market tear them apart and weld them into something which can again make profit and grow and hire workers.
What would it look like if McDonald’s distributed 100% of its net profit to its employees:
Distribution of 100% of net profit:
5,559,000,000 net profit / 1,700,000 MD’s (source said 1.7M+) employees = additional $3,288 per employee per year or an additional $65 / week (assuming 50 weeks of work and two weeks of missed scheduling)or an additional $2.19 per hour assuming part time @ 30 hours per week.
(This of course would be a GROSS “benefit,” before federal, state and local taxes were applied).
(Originally published 8-29-2014 on my facebook)