My immediate reaction when I read this article about fast food workers wanting to unionize and striking against the stores that employ them was “I wonder if they realize that they’re striking against the wrong people?” Most McDonalds stores are franchises, owned and operated by the franchisees. Here’s a typical income statement for an average McDonalds store, compiled by Janney Montgomery Scott restaurant analyst Mark Kalinowski:
As you can see it’s a high volume/low margins business. If the workers are striking for just a 10%, an $.80 an hour, raise, that’s a third of the present operating income. $1.60 would be two-thirds. Obviously, the only way for the franchises to raise wages is to raise prices, too, which in turn means that the volume will probably go down. Since fairness seems to be the watchword these days, what’s fair?
The people making money are the McDonalds Corporation and, probably, the landlords.
