Franchisees fight back against $15 wages The International Franchise Association, the industry's largest trade group, wants the Supreme Court to take up its challenge to portions of Seattle's $15 minimum wage law. Seattle's City Council in June 2014 voted to raise the minimum wage in increments, hitting $15 an hour by 2017 for businesses with at least 500 staffers. The $15 level is more than double the federal hourly minimum of $7.25. The International Franchise Association and five Seattle franchisees quickly sued Seattle, which like New York City has moved to treat smaller franchised businesses like larger companies. http://www.cnbc.com/2016/01/27/franchisees-fight-back-against-15-wages.html
I used to think raising the minimum wage was a bad idea. Now, I'm not so sure. Prices go up alittle. Profits go down alittle. It's not going to kill us, especially for minimum wage workers. I'd rather pay alittle more to subsidize WORKING PEOPLE, then pay more taxes to subsidize people who sit on their ass
You've never owned a restaurant. Restaurants have by far the smallest margins of any business. This is especially true of fast food restaurants who sell their food for nothing.
Do they? I know people who own pizza and burger king franchises here, and they make pretty good money.
Ricter you don't live in reality. The "big corporations" don't own these restaurants. They sell licensing fees to franchisees. That's how they make money. The little guy that owns the franchise is deep into debt to the corp. He doesn't go under because he does what all other americans do, he borrows more. The corp is more then happy to lend because they get very attractive terms on the debt. Most of these fast food places are zombie shops. They are not running a profit and they are deep in debt. The corps make money because they own the land which has appreciated immensely the last 50 years and the interest they earn on their loans plus their license fees. I just wish you owned a business for one day in your life so you could learn a little about this stuff.
And I know a guy...... Come on dude, you are smarter then that. I don't base my knowledge in economics on "a guy I know". I look at data. Walk into your bank and sit down with a small business loan officer and tell him you want to get a loan to start a restaurant and let him share the "data" with you. He'll be more then happy to do that. Let's raise the bar here a little bit beyond "I know a guy".
Actually, I know four people. One owns four pizza pizzas in Australia (half cousin). He's a millionaire. One owns the third busiest Pizza Nova in Canada (the shop does 2 million a year in gross sales...I've seen the statements). One just bought his own Pizza Nova shop at a not-so-busy store, and he's making 70K as the owner. And one is a family friend, who owns 3 Burger Kings in the area. Another millionaire. Prices are higher here in Canada, so the margins may be higher. I wouldn't discount real-world data. Rich guys are always singing the blues about how they're not making any money Also, most pizza shops pay under the table. Not sure about Burger King.
I know the pizza business pretty well. A good friend of mine was in the business and his brother owns 3 different locations. My buddy went out of business and closed shop while his brother is making a killing. I saw the receipts and the cash flows of the business for years. Pizza places are a little unique and you are right, they DO pay under the table. Most drivers made most their money in tips and never claimed the money. The owners got the drivers to also work inside the shop for little money but higher delivery fees. Labor costs in pizza places are very low. My buddies brother who is making a killing realized the secret to the business was getting rid of the dining room and moving to all delivery and pick up where labor costs were almost zero. This does not work in the sit down restaurant model but pizza joints milk this. Generally to do well you need to own a bunch of these. So the guy who is "making a killing" is not really making that much on the margin, he is simply leveraging capital (shocker huh). Their per restaurant return is small but if you own 5 of them you are doing well.