Is this fast food? If not you must figure in tip income when figuring compensation. Food cost is in COGS I assume. Franchise fees? It looks like this business is barely profitable even with 7$ labor. A bad sign.
Lets pretend it is fast food. It doesn't matter, because the math works the same. Tips would only be wages declared and not paid out, but would be taxed and paid on taxes (so long as they were declared). The math would still be the same. And the argument here is raising minimum wage to a "true wage cost", right? Isn't that what you've been saying? Food costs are in COGS (Cost of Goods Sold) as I would figure someone with your esteemed economic knowledge would already know. 6-8% margin is actually high in the restaurant industry. I thought you would also know that. But apparently you do not. Here is a link you can see on google if you don't believe me. You want to provide a P&L and we can go through it? Because you obviously cannot answer the questions I put forth and would rather nitpick at the numbers than address the fundamental math problem.
I did notice COGS. You responded before I could edit. Tips affect the result because in figuring compensation for restaurant workers you must take tips into account. If tips are involved, to get them up to 15/hr you need less then your spread sheet shows. By your estimates prices will have to rise ~20% ; an 8 buck meal costs 9.60. No problem there. Of course when tip income is included the cost increase needed is less. Even using your figures its a big win for wait staff. the cost of a meal out goes up 20%, but their wages, by your figures, go up %111 It's a real win for everyone. Plus we now have an honest economy. Let's do it! I'm inclined to try and see the other guys point of view. But the more I think about this, the more trouble I'm having seeing any justification for subsidizing low wage workers. It makes far more sense to pay them a reasonable wage and get rid of the subsidies. And a lot simpler too. Your going to have to go some to convince me we need more socialism in the business community.
That's it exactly. And the $15/hr wage is arguably in the right ballpark most places. Where economists can argue is what should be included in the computation. It is controversial whether savings should be included. I think they should. I favor including savings at 10% of gross income. This would be great for the entire nation!
Hold on there, nelly. You've not proven a single thing. First, you say "by your estimates, prices have to rise 20%". Please show your math. I think I know how you're getting to that, but I'm not sure, and I will withhold my response until I hear from you. Second, please support your claim that whatever prices have to rise, "it's no problem". Because without a competitive landscape, I'm not sure how you can come to that conclusion.
I see that all you've got is snarky comments and no answer to my economic problem posed above. I posted a P&L, you failed to do the proper analysis of this P&L. You complained about tips not being in there, despite me not stating the type of restaurant. That was your only input. So you cannot show how pricing or some other measure can counteract the effect of wage rising at the enterprise? You cannot show any of the math at all in how you got to your random claim about 20% price rise?
I've read what you posted, Piezoe. I even answered your post with some questions. Are you going to answer how you came to "the cost of a meal goes up 20%" and why this is "no problem"?