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How would a $15 minimum wage impact the fast-food restaurant?
The $15 minimum wage is inevitable—maybe not on a national scale, but certainly in a number of states and cities, some of which are surprising. In theory, this would be bad for fast-food chains, which sell burgers and chicken sandwiches at low prices and therefore keep frontline wages low so they can earn a profit.
How does minimum wage affect large businesses?
A minimum wage increase can improve the productivity of a given firm’s workforce because higher wages reduce turnover. In fact, there is strong empirical evidence that higher minimum wages lead to more stable and experienced workforces.
Why are big companies raising minimum wage?
Employers that raise their minimum wage often act to offset the increase in costs. For example, some companies reduce the amount of labor they need by investing in automation or having fewer people working on the sales floor during a given shift.
Why did McDonald’s raise prices?
The chain has been increasing its menu prices over the last year in order to keep pace with increasing costs of labor and supply and has recently confirmed that the increases from earlier in the year are will carry through the end of 2021.
How does McDonald’s make money?
Essentially, McDonald’s makes money by leveraging its product, fast food, to franchisees who have to lease properties, often at large markups, that are owned by McDonald’s. As reported in their 2019 10-K, 36,059 of the 38,695 restaurants were franchised with McDonald’s operating the remaining 2,636 restaurants.
Who pays 15 an hour?
Amazon raised its starting wage for all U.S. employees to at least $15 an hour in 2018. “We’ve seen the positive impact this has had on our employees, their families and their communities,” the company stated on its website.
Will McDonald’s raise wages to $15 an hour?
McDonald’s is among fast-food franchises to raise wages in a tight labor market and plans to reach an average of $15 an hour by 2024 at all company-owned restaurants.
What is the McDonalds business strategy?
McDonalds business strategy utilizes a combination of cost leadership and international market expansion strategies. Franchising and licensing forms of new market entry is utilized within McDonald’s business strategy to a great extent.
What are the financial risks at McDonald’s?
Compared to other risks, financial risks can be mitigated through various hedging instruments. McDonald’s generally borrows on a long-term basis and is exposed to the impact of interest rate changes and foreign currency fluctuations. Debt obligations at the end of 2018 totaled $31.1 billion.
What does McDonald’s corporate view on wages mean for franchisees?
The McDonald’s corporate view catches franchisees in the crosshairs of a battle being fought with massive competitors on a broader low-wage worker landscape. “I think what’s happening is that you’re seeing that a great economy is very helpful to growing employee wages.