General Discussion
In reply to the discussion: Fast-Food Strikes Expand Across U.S. to 50 Cities [View all]delete_bush
(1,712 posts)but owning a sandwich shop is of no interest to me regardless of price. At the time I was doing this I found it better to keep my personal likes and dislikes out of the equation. I helped them to understand the financials, the lease, what-if analysis, comparing the pros and cons of one business vs. another, etc. If something looked fishy to me Id certainly bring it to their attention, and often this was enough to dissuade them. But in the end they each have their unique goals and aspirations.
Im not sure what youre referring to as all that overhead in a mom/pop vs. franchise. For many buyers a franchise is I believe a better way to go. They have a proven name brand with lots of advertising, typically better locations for several reasons, training, structure, design, marketing, less chance of going out of business and a number of other services. All of which results in higher sales vs. a mom/pop although there is certainly a high cost for this as well.
Im not purposely ignoring your point, I much prefer a direct question and if I dont know or you can change my mind Ill admit it. Getting back to the business with $300K sales, food cost at 30% = $90K, rent-utilities-insurance-etc of $75K plus wages of $80K leaves the owner a net of $55K. If the average employee is at $9/hr, a raise to $15/hr will increase wages by $56K, leaving the owner nothing. Not only that, but this base wage is going to create tension with those who were formerly earning $14/hr. That aside, I have to believe that food costs will go up as well. The folks who make the bread, provide the produce, napkins etc will be affected by this too. How much, who knows, but even if only 15% it will increase the food cost by $14K. So for the business owner to get back to the $55K level he will need to increase sales by $107K to cover these increases, for an across the board price increase of 35%.
And this is not just restaurants, other retail will be affected. Clothing, groceries, coffee shops, department stores will all feel the impact. And what about those on a fixed income who are just getting by the way it is. Ill pretend for now that there will not be a huge increase in unemployment. Have you considered the inflationary impact on housing? It would be significant. All of a sudden a couple of 18 year olds just out of high school will be earning $60,000 per year! Aint that great! I think theyre gonna want a better place to live, dont you? After all, instead of the $900 in rent they were paying before they can easily spend $2,000 or even buy a house, maybe from the guy they work for as hell be forced to take their former apartment, with a displace senior citizen as a roommate. Imagine the power of the dual income 18 year olds working at the Gap and Pizza Hut.
This is much more than spreading the wealth around a little, its catastrophic. Fortunately it wont happen.
As an aside Im in San Diego so Im well aware of the cost of housing, good for you.