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Raising prices by 1.3% also has some impact on sales. In theory it should be greater than 1.3% (or else why hasn't the restaurant greedily raised its prices alr

Raising prices by 1.3% also has some impact on sales. In theory it should be greater than 1.3% (or else why hasn't the restaurant greedily raised its prices already). To get higher wages for the workers you need one of two things. 1. Go upmarket in some way, either sell nicer food with a better margin or higher more oroductive employees. 2. Through collective action of some kind get all competitors to raise their prices and pass the cartel profits to the worker (for instance a minimum wage law could accomplish this).

knute 4y ago
I don't think that those are the only two solutions. Off the top of my head you could 1. Reduce expenses in other areas 2. Accept the reduced profit 3. Find that the cost is offset by more productive employees either through morale increase or improved recruiting
- mjburgess 4y ago
  Profit in most industries is a few percent, esp. retail/food which are often c. 1%. The markets are highly competitive, and consumers will compare two stores: A, B and choose the cheaper.
  - knute 4y ago
    I think there's a lot more that goes into where someone chooses to eat than price, otherwise Taco Bell would be putting Chipotle out of business. As explained above, I don't take it as a given that increased employee wages require increased prices.
    - mjburgess 4y ago
      Then have a look into how much a taco bell franchise makes: https://sharpsheets.io/blog/taco-bell-franchise-costs-profits/ https://sharpsheets.io/blog/taco-bell-franchise-costs-profit... It's 15% "profit" on paper, but a franchiser is typically in debt for the first 12 years of the store before they make any "net profit". So we're talking an industry where most of the so-called "capitalists" are in debt. This is a hyper-competitive market place, and one play only adding on %s to their products will be a hit to their competitiveness. They dont decided prices, the market does.

knute 4y ago

I don't think that those are the only two solutions. Off the top of my head you could 1. Reduce expenses in other areas 2. Accept the reduced profit 3. Find that the cost is offset by more productive employees either through morale increase or improved recruiting

mjburgess 4y ago
Profit in most industries is a few percent, esp. retail/food which are often c. 1%. The markets are highly competitive, and consumers will compare two stores: A, B and choose the cheaper.
- knute 4y ago
  I think there's a lot more that goes into where someone chooses to eat than price, otherwise Taco Bell would be putting Chipotle out of business. As explained above, I don't take it as a given that increased employee wages require increased prices.
  - mjburgess 4y ago
    Then have a look into how much a taco bell franchise makes: https://sharpsheets.io/blog/taco-bell-franchise-costs-profits/ https://sharpsheets.io/blog/taco-bell-franchise-costs-profit... It's 15% "profit" on paper, but a franchiser is typically in debt for the first 12 years of the store before they make any "net profit". So we're talking an industry where most of the so-called "capitalists" are in debt. This is a hyper-competitive market place, and one play only adding on %s to their products will be a hit to their competitiveness. They dont decided prices, the market does.