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HomeOff Topics News & Politics › Your fast food price is going up, a lot.
08-30-2013 07:50 AM  5 years agoPost 21
Phaedrus

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S. Orange County, California

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So a 50% pay increase. Wonder if 50% higher food prices will affect sales? Maybe they will need fewer employees. More automation.
So right now if it is $10 to grab a fast food lunch it becomes $15. Higher wages = higher inflation. Net gain = $0.00 Everyone else will have to get raises to cover the higher costs....Circle of inflation.
Forbes contributor Tim Worstall argues that the answer to the question is simple: The cost of a Big Mac–at least to consumers–probably wouldn’t go up at all. Why? In order to remain compeditive with rivals on price, the company, as economist Adam Ozimek pointed out earlier this week, would probably find a way to keep overall labor costs in check, most likely by reducing the number of workers and introducing more automation–think ATMs in the banking industry.)
http://www.forbes.com/sites/clareoc...id-15-per-hour/

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08-30-2013 08:06 AM  5 years agoPost 22
japan3d

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Sagamihara-Shi Japan

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I say raise it to $15 a hour. Then all those minorities can start paying income taxes, and not get all their taxes back on April 15th. Bet that would wake them up. Nah, what was I thinking, a liberal wake up.

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08-30-2013 12:29 PM  5 years agoPost 23
ssmith512

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Indianapolis, IN USA

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Dr. Bittlingmayer described discussions on fast food wages as a symptom of a larger problem: the U.S. school system. “Low wages for adults are a sign that something didn’t go right in terms of education and work experience,” he said. “We’re not addressing the cause.”

Steve

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08-30-2013 12:53 PM  5 years agoPost 24
baby uh1

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St. James, Mo.

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Why do we need schools when we have unions for demanding stuff for uneducated people?
Soon you will be able to drop out of school at the age of twelve and start your "career" in fast food right away.
Mass ignorance is job security for democrats.

Anything is possible if you don't know what you are talking about!

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08-30-2013 01:02 PM  5 years agoPost 25
GREYEAGLE

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Flat Land's

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Take the cost of product down to the consumer level: Awareness
Two medium Dairy Queen Blizzards:

$3.99 EACH

Out the Door w /TAX =$8.54

For Ice Cream = Yummy !!!

Where is the problem ????

greyeagle

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08-30-2013 02:53 PM  5 years agoPost 26
Phaedrus

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S. Orange County, California

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Then all those minorities can start paying income taxes, and not get all their taxes back on April 15th.
What about the white people who work at these places?? Or do you just have an axe to grind with "those minorities"??

BTW - $15/hr, even at full time, is $31,200, so I'm betting they still get all their with holding back. Oh, and since they will have more money to spend, they will likely buy more stuff, and generate more sales tax revenue and increase the bottom line at the places they shop.

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08-30-2013 03:20 PM  5 years agoPost 27
GREYEAGLE

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Flat Land's

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Real as it Get's - Business owner's paying Minimum : Your the OWNER - making payrole

Waste basket's over flowing, bathroom's disgusting, table's uncleared and full of old food and litter, floors disgusting do to rug rat's tossing food, condiment bottles empty, window's and door's filthy.

Car's backed up 8 deep on the pickup window. Counter two or three deep.

Their is a reason that cash registers have pictures, pictures on the menus, and order by number.

Three employee's are on their tablets -in a booth -surfing the net the fourth is holding her infant - during a visit by grand mother visiting, with the other three. Counter help - Boy's and Girls' are playing grab azz.

You still wait for it to be cooked and it could be wrong.

Then too be told " I don't empty waste basket's or do bathroom's " or fold chair's.

Ever seen the actual margin's of a Franchise - EEEE : Cost Vrs Net and actual operating fixed overhead

It's a walking riot If they show up for work and scheduling

Here's another one

A Very Nice Family style Chain come's in and set's up shop at a great location. Business is GOOD ! Employee's with shared tip's ALL make pretty good money. It's a NICE full Menu + restaurant - preparation is Excellent.

After ONE Year : They close :

Standing in front of City Council - The Council asks { Why did you CLose ??? - It is a great restaurant for our community }

His response was { What do you charge me in TAX ???? } -

They dial it up on the computer and say : Annually it's $44,000.00

Looking them straight in the eye he replies :
\
??? Do You Know how many Pancakes I have to sell to make $44,000.00 ??

greyeagle

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08-30-2013 03:33 PM  5 years agoPost 28
rander1

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Dallastown, PA

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There are so many flaws in this arbitrary $15/hr argument.

First off while there is a federal minimum wage, however each state can set their own minimum wage. For example Washington state has a $9/hr minimum wage.

Second, most fast food chains are franchises and the pay is local to the market. A bum town in the middle of PA cant bear prices to support such a wage. In that case the store would close all together because it would no longer be profitable.

Third companies require profit to operate, and anyone who understands economies of scale knows that 10 cent increase in your production costs can quickly chew up your profit margin and make it impossible to pay your debts and shareholders.

I bet no-one making this 15/hr argument even knows what cost of capital, cash flow from operations or profit margin is for any fast food chain.

I'll give you a hint, McDonalds has a 19% profit margin. However many other items need to be considered, like unrealized carrying costs and future interest payments on debt.

http://ycharts.com/companies/MCD/profit_margin

For simplicity sake $7.25/hr * .19(MCD profit margin) = $1.37 increase in pay. If you were to double the input cost of wages it could require the company to have %300+ profit margin.

Fact is, if you increase wages across the board, you get increased prices across the board.

If you limit wage increases to a certain type of job, other companies will steal the business from them under a different technical title. (For example gas station food is not technically a fast food chain).

The economics of it are impossible

Tic Toc Tic Toc

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08-30-2013 03:43 PM  5 years agoPost 29
rander1

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Dallastown, PA

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People are getting hood winked, the problem is not wages, the problem is food price inflation. (Which is not included in the countries CPI calculations since 2008)

The people are protesting because their stadard of living has been eroded by inflation. Food prices in some areas have increased 80% in the last 5 years.

http://www.ers.usda.gov/data-produc...ce-outlook.aspx

We need to stop printing money and kill the EPA. All goods have to ride in a truck or train at some point. This is the bulk of the problem.

The other problem is all of the extra overhead that is added to companies costs, like SOX, EPA regs, Obamacare, Taxes etc...

Obamacare recently forced a ton of companies to switch their workers to part time from full time so they wouldnt have to comply with the mandatory health care that they cant afford to supply. Guess what all of those full time employees now have to have two part time jobs.... If obamacare didnt force that, everyone would be happier, employee and employer.

We need to look how to bring prices down, not push them up. Inflation is a regressive tax.

Tic Toc Tic Toc

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08-30-2013 03:48 PM  5 years agoPost 30
R Hudson

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Denver, CO

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rander1,

Thank you for some realistic insight.

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08-30-2013 03:56 PM  5 years agoPost 31
GREYEAGLE

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Flat Land's

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You are double Hood Winked : Food Price Inflation
Check your Rib Eye Price this week end ! Not by the EACH PRICE but by the LB PRICE . Most places have gone too selling by the EACH to confuse the infidel that cannot do basic math.

Any where from $16.00 a Lb to 18.00 a LB

Here is where the public has been droned in to Stupidity or Hood Winked.

This Countries Business is GROWING FOOD : We grow so much or raise so much live stock or process so much :

IT IS IMPOSSIBLE FOR US TO EAT IT ALL - Yet a major portion of our children depend on School meal's to eat - and some take home food for the week end. Re -Soup Kitchen's stuff

So WHY ???? Who -OR WHAT has got this Nation by the Beard ???

The Judea /Christian Nation of Benevolence has been bent over the Barrel

greyeagle

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08-30-2013 03:56 PM  5 years agoPost 32
Dennis (RIP)

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Oregon

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BTW - $15/hr, even at full time, is $31,200, so I'm betting they still get all their with holding back. Oh, and since they will have more money to spend, they will likely buy more stuff, and generate more sales tax revenue and increase the bottom line at the places they shop.
Ok fine.

How do you make up for stores laying off folks because of increased prices that decreased sales?

How do you make up for stores closing down entirely because of lost sales do to increased prices and laying off entire crews?

How do you make up for unemployment benefits paid out due to additional workers on the unemployment roles as a direct result of mandatory wage increases?

Take off your lefty rose colored glasses.

Your math sucks slick.

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08-30-2013 03:59 PM  5 years agoPost 33
rander1

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Dallastown, PA

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How do you make up for stores closing down entirely because of lost sales do to increased prices and laying off entire crews?
This is true, if prices have to increase at fast food restaurants, people will stop eating fast food and eat restaurant take out instead or go their local WAWA.

Where I live, Sheetz and Royal Farms are closer and have better food than MCD. I eat at those establishments more than any fast food chain.

You cant control an economy where people are free and self interested. The only answer would be to have an entire command economy. And we all know how that works.
BTW - $15/hr, even at full time, is $31,200, so I'm betting they still get all their with holding back. Oh, and since they will have more money to spend, they will likely buy more stuff, and generate more sales tax revenue and increase the bottom line at the places they shop.
Wrong, in 2009 the lowest quin-tile of income received a net payment of 9.3% from the federal govt. (Meaning they paid no income taxes and received a 10% bonus on top of that)

The second lowest quin-tile received a net payment of 2.6% on top of their tax free wages. We are still shoveling money at the lowering class, literally giving it to them. This was in 2009, they dont publish effective tax rates anymore... wonder why??

Everyone running around buying up more stuff is not better for the whole, this causes an increased quantity demanded and will cause higher prices for everyone given the same supply.

I dont know why you think more sales tax revenue is better, the politicians arent putting it to good use, they are stealing it from you and pocketing it while sharing with their buddies. (Look at the MD municipal construction bond rates if you dont believe me, wayyyy above market (~10%) and you have to be on the inside to get the funding)

Tic Toc Tic Toc

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08-30-2013 04:50 PM  5 years agoPost 34
koppter

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Virginia

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<<Fact is, if you increase wages across the board, you get increased prices across the board.>>

that would be true if there was a fixed relationship between wages and output, but there are far too many variables for any one change in production to cause a predictable shift in output costs. what does happen is companies, knowing that we have an inflationary economy and that minimum wage rises over time, invest in improving efficiency so they can absorb or defray additional costs.

any business textbook wil tell you that the number 1 cause of business failure, so far above anything else that anything else is insignificant, is poor management. nothing i have seen since learning that simple truth many years ago has caused me to question it.

micro ec 100

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08-30-2013 04:58 PM  5 years agoPost 35
rander1

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Dallastown, PA

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that would be true if there was a fixed relationship between wages and output, but there are far too many variables for any one change in production to cause a predictable shift in output costs. what does happen is companies, knowing that we have an inflationary economy and that minimum wage rises over time, invest in improving efficiency so they can absorb or defray additional costs.
This is true, except that the cheapest way for them produce that output today is with man power.

Yes they may be forced to look for efficiency improvements to try and make up for the forced increase in costs, but that still requires additional capital, R%D, and time. There might be an ROI but these things don't change overnight and competition pressures and demand will dictate whether or not that is feasible.

If the ROI on an efficiency investment is 10 years, but they have raise prices to pay the short term debt. Then they may go out of business in 5 years.

Knowing that we have inflation is not a major player in deciding of efficiency investments. Interest rates, ROI, competition, cash, shareholders, supply and demand do.

Furthermore, the allocation of capital and labor is most efficiently placed in a free market. Manipulating cost inputs incorrectly directs capital into places that they would have not been otherwise.

This does not promote efficiency and the opportunity costs could never be truly calculated. Basically dont screw with economic inputs. History has proven time and again that it is a bad thing to do.

Tic Toc Tic Toc

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08-30-2013 05:08 PM  5 years agoPost 36
Dennis (RIP)

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Oregon

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that would be true if there was a fixed relationship between wages and output, but there are far too many variables for any one change in production to cause a predictable shift in output costs. what does happen is companies, knowing that we have an inflationary economy and that minimum wage rises over time, invest in improving efficiency so they can absorb or defray additional costs.
Thats not true in all cases that you mentioned. In some industries manpower is no necessarily the largest cost of doing business.

But, by and large, especially in the low wage fast food industry, their largest cost of doing business is manpower.

Double the largest cost of doing business and you must increase prices to offset additional cost which in turn cuts sales output which in turn cuts manpower and increases unemployment. Some stores would close down entirely and the entire crew would be on the streets.

It don't take a rocket scientist.

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08-30-2013 05:33 PM  5 years agoPost 37
GREYEAGLE

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Flat Land's

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This cannot be real - What color Uniform's ????? - Welcome to SOCIALIZM
Terrifying :

By Polar Bear Coin's - Turn your Home / 401 / IRA and Future of the World's economy to the GoV.
You cant control an economy where people are free and self interested. The only answer would be to have an entire command economy.
Get in line - hOPE YOU ARE not hungry AND sICK AS hE!! ITSELF and Home Less ------
Wrong, in 2009 the lowest quin-tile of income received a net payment of 9.3% from the federal govt. (Meaning they paid no income taxes and received a 10% bonus on top of that)
Wrong: Social Support in {all arena's} even down to a Buss token or Obama Phone - Sub Rent - Food- Medical ect.

I will Not TEll YOU - It would start a animal stamped !! The Other's would Vomit and lose their Bowel's. That is TAX money -The Per $$ available to the indigent is Shocking Overwhelming to the intelligence .

SOCIALISM of a Population that is absolutely HELPLESS

Been Taught To sit on their Tail - Victumologist's

I'm in the trench's or the spooky dark basement = It' Stink's !!!
I dont know why you think more sales tax revenue is better, the politicians arent putting it to good use, they are stealing it from you and pocketing it while sharing with their buddies.
LIE : THEY are trying to feed a population that sit's on their AZZ with their hand's out while talking on a OBAMA PHONE - wearing $300.00 Tennis shoes. The $$$ IS NOW GONE

This is true, except that the cheapest way for them produce that output today is with man power.

LIE : ONE or TWO MEN can run a completely automated factory -
One or Two Men can run a 1000 head or More Hog Confinement for food.
One Man can run two milling machines or lathes - MANUAL"S
Then toss in machining Center's

One Man can Harvest 1000 Acres'

The Socialist WILL Starve -Then look at the countries they are coming from - Dieing of Starvation and Warring for food

Socialist Countries ;

greyeagle

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08-30-2013 05:51 PM  5 years agoPost 38
koppter

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Virginia

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the problem with your arguments is that they assume that businesses operate in static environments, which they do not. there are plenty of indicators over time that direct future investment and companies that fail to look at those markers are the ones that die. this really is basic micro econ, of which I have a feeling none of you know much about.

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08-30-2013 06:00 PM  5 years agoPost 39
rander1

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Dallastown, PA

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Or maybe you lack macro education. Raising wages across an industry is a macro problem.

I don't assume static environments and none of my explanations demonstrated that. Static and economy cannot, and never is used in the same sentence.

As far as education goes I have an MBA with a finance concentration and am an industrial engineer for a suppy chain. I deal with this stuff everyday.

Tic Toc Tic Toc

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08-30-2013 06:10 PM  5 years agoPost 40
koppter

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Virginia

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well, you have a missing business acumen degree? great. then you should know that production and revenue cost curves are not linear, and that's what we are discussing. in college, we called this business calculus, and if definitely was looked through a micro econ lens.

sorry about the jab...that was what many were calling MBA programs a while back. we don't have to agree - after all it is economics -but it is nice to see someone on this forum who actually has an academic background in the subject matter and isn't just spouting rhetoric.

my academic background has an emphasis in accounting, which is more closely linked to micro than macro, so my thinking tends to be as a company, rather than an industry level. I do agree that industrial changes are macro and those changes spill over into other economic segments.

i'm at work, so I have to stop or my personal economic fortunes might be at risk....

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