veteran+ wrote: ↑January 4th, 2020, 9:02 am
The lack of available quality workers is not indigenous to California. Minimum wage increases that result in ANY retailer or restaurant or business reducing their hours and short staffing is quite telling of the business itself (and it's NOT good). They do these things at their own peril and damage and is very short sighted.
Wendys is what it is now because of how it runs its business and has nothing to do with minimum wages that they must comply with. McDonalds is all about increasing profit and if they can do that with tech and NOT employee benefits then thats what they will do.
Companies love to cry about wage increases instead of looking at their business model, changing demographics, internal management skills, etc. and OVER THE TOP need for glutinous profits for their shareholders and executives.
Sorry but that really is the issue and it takes a huge amount of humility for a business to go back and revisit their Model and the Market and make those changes even if its uncomfortable, painful and embarrassing. It also takes Executives and shareholders to adjust (even temporarily) their appetites for wealth.
I was also a small business owner TWICE! I can tell you that if one properly executes an extensive and comprehensive business plan and commits to real R&D and has the trained skill set to run the operation YOU CAN take care of your employees and be profitable (things that humans {your employees} need like a living wage and health insurance, etc.).
This sounds harsh and I apologize in advance but, if you cannot properly take care of your most valuable asset (employees) you should NOT be in business. There is something wrong with your company and its leadership.
Fast food operators have far less leverage than independent small business owners. They're bound to contracts that set (often variable, based upon sales) percentages owned to Corporate. They have little, if any, choices for wholesale food, paper, equipment, furniture and fixture pricing. Of course, Wendy's operators have more leverage than McDonald's -- simply because the chain needs operators -- but in recent years, they've been struggling to control their pricing, as Wendy's continues to hammer out national promotions (via aggressive coupons, pushing toward app usage, 4-for-$4, etc.).
In California, minimum wage has raised an extra $3.25/hour (including employer taxes) compared to when Wendy's introduced the 4-for-$4. Almost unquestionably, wage expense is rising much faster than revenues.
A pair of Wendy's near me use to be open until 1AM and 2AM, and now close at 9PM and 10PM respectively. It's understandable... the bare minimum they'd be paying in wages for those four extra hours is nearly $120 (assuming minimum wage, employer-paid taxes, and a minimum of two workers, which is required by the company). At Wendy's, on average, the cost of food/paper is about a third of the average check. This means that, at the minimum, a restaurant would need to record nearly $200 in sales (including other fixed expenses) over those four hours just to break even. Obviously, in stores where promotion sales are higher (higher food costs to the operator), where wages are higher (some operators require a shift leader at all hours) or where cities use a formula that requires more than two people to be onsite, that number is going to be much higher.
There are plenty of Wendy's that don't come anywhere close to $200 in sales over those hours (even if it seems like a small number). So yes, because operators can't pass on the wage increase to consumers, they're closing their restaurants earlier, even if they're otherwise good operators.