They’ve done really well, but the big companies have adapted. They have bought a lot of the small companies but didn’t change the branding, so you can buy craft beer from CoorsMiller or ABInBev without knowing it. A local beer in Houston (Karbach) recently got bought in this fashion.
The micro breweries can’t compete with the distribution channels and lobbying power the big guys have. There is a free documentary called Beer Wars (I think available on YouTube) that does a good job going through their challenges.
What minimum would you like McDonald’s to pay and how much would that cost the company incrementally?
It sounds like the guy was a successful owner. Not all of them are.
Plus, how do you know they aren’t/weren’t up to their eyeballs in debt? Did they have kids to pay for? How much was their mortgage? Did they inherit money?
How much has the cost of beef gone up? How much has the cost of eggs gone up? How much has additional regulation cost the business? So on and so forth.
I.e. how much have other operational costs gone up?
I’m nowhere near smart enough to come to a reasonable data driven number on this.
I don’t. That’s why I gave the disclaimer acknowledging it was a sample size of 1.
Edit: that being said, I know McD specifically has fairly strict financial requirements to qualify to start a McDonalds. Lowers the risk of it burning out, which they don’t like.
Costs have gone up less than prices, hence the rising margins over time.
Sure, you are. Don’t sell yourself short. All you need to know is how many employees make the minimum (based on what country they’re in, how to handle wage compression, and then do some basic math.
Okay, but that doesn’t necessarily mean their COGS has gone up slower than prices. They could have had bad debt write off, they could have reduced their OPEX, etc… It’s hard to say just from that chart.
Admittedly, my accounting knowledge is fairly limited, but doesn’t the “operating margin” from that chart cover gross margin minus all costs, both direct and overhead? With the exception of 2007, it shows a pretty steady rise dating back to 2005.
Also, the “why” of the moving needle in regards to profit seems to be a distinction without a difference. If the question is “are prices outscaling costs?” the answer seems to be undoubtedly yes, unless the graph I linked is simply not accurate.
Yes, but it doesn’t show the driver behind the change. It’s a combination of things no doubt. My point being, it’s not necessarily that prices went up, hypothetically, 5% while COGS (beef for example) only went up 2%. Increasing EBIT and profit margin. It could have been a reduction in overhead through a number of avenues. Headcount reduction, investment in cost savings initiatives, etc… or even just accounting items like bad debt release (which is very likely because the bad debt rules change next year iiic).
Sure, I think it just depends on how you look at it. Margin is up and they could use some of that to pay higher wages. However, it’s important to know why margin has increased before you add an incremental cost like a higher minimum wage because that’s not just a one-time expense. It’s a year over year increase to operating expense that isn’t easily walked back.
You also have to consider how a lower margin will impact investors.
So, let’s just go with 90K employees at $10/h. Let’s assume they’re all part-time so (20/h week/1,000 year) and move to $15/h. That’s 1,000 x 90,000 x $5. That’s $450M. I don’t know what benefits they get, but let’s just assume a flat rate of 20% (that’s generous). Total Comp increase is roughly $540M.
The other portion is the compression piece, which is a lot more difficult to figure out, but it’ll be expensive too.
That’s a pretty significant increase in compensation expense year over year.
Yeah, you are definitely outdated here–theyre subject to minimum wage as well. One of my problems with minimum wage hikes is they drive mom and pop businesses out faster than mega chains due to economies of scale. I am not anti-minimum wage, but there are some big problems here
I got sick of guessing so i went to McD’s financials. From 2012 to 2015, McD corporate decreased it’s payroll/benefits per employee by about 8% a year. In 2016, McD “closed” about 15% of it’s corporate owned stores (sold them as franchises) and the payroll/benefits per employee jumped back up to ~2014 levels.
They’ve been actively reducing payroll/benfits per employee year by year, while seeing an increase in prices. Seems this is a result of decreased corp store overall revenues as they phase them out into franchises. McD also seems to be shifting focus more heavily onto franchised stores in general as opposed to Corp owned ones (might have a lot to do with the rise in margins).
Capitalism at its finest. Unfortunately, that’s literally how it’s supposed to work. Weed out the weak.
2/10. You’re still really bad at trolling. The internet is an amazing teacher. Go forth and learn, my son.
Edit: Also this doesn’t really help their case. (the drop in 2012 looks to be Skinner the CEO retiring)
And you still have no idea what “trolling” is. According to Wikipedia: In Internet slang, a troll (/ˈtroʊl/, /ˈtrɒl/) is a person who sows discord on the Internet by starting quarrels or upsetting people, by posting inflammatory,[1] extraneous, or off-topic messages in an online out of the (such as a newsgroup, forum, chat room, or blog) with the intent of provoking readers into an emotional response[2] or of otherwise disrupting normal, on-topic discussion,[3] often for the troll’s amusement.
Posting a response to a single person, who is intelligent enough to “get” a joke, is not trolling.
You need $750k liquid to buy a McDonalds; they are basically the poster-child for the franchise model. I think the average does well over $2M in sales per year. They vet their owners very carefully and, while I am sure there are exceptions, the vast majority are very successful. In fact, I don’t recall ever seeing a McDonalds close down.
I’ll respectfully disagree–minimum wage hikes by definition is not the pure capitalist thing to do, on multiple levels. That doesn’t necessarily make it bad though
If you disagree with that definition, please post yours or one with which you agree. I’m quite certain that usmc did not find himself triggered by my post. You made the claim that I was trolling, so please provide some sort of evidence to back your claim. If you can’t back your claim, then please stop trolling(that is actually what you are doing) my posts.
Good stuff. There’s a boomlet on this issue, but it’s going to take a lot to turn it into policy. Republicans are beholden to Big Business, and Big Business will direct them to leave antitrust alone. Everyone knows from Econ 101 that competition is good and important and in the public interest, but wealthy, established business owners hate competition, and want their private interests protected, and the GOP is happy to oblige.
And Democrats are a long ways from regaining power, and maybe they can make it a signature issue, but it may take some time since we had 8 years of a Democratic White House who did nothing about it, and let it get worse (and actually watched as big banks helped write Dodd-Frank and then moved to consolidate the industry under a few behemoths even more).
