From that Font of Wisdom known as Salon:
McDonald’s investors have some reckoning to do at the company’s annual shareholder meeting today. Over the past year, the Golden Arches has come under fire from all sides: Weak consumer demand has led sales to slump. Satisfaction among franchise owners has now sunk to historic lows, with many expressing interest in selling. Class-action lawsuits against the company were filed in three states last March, alleging widespread and systemic wage theft. A company web site became a national punchline last fall for suggesting that low-paid employees adjust to the strain of financial hardship by singing away their stress and taking smaller bites of food.
And, just last week, hundreds of McDonald’s workers held the latest in a series of one-day strikes that have now hit over 150 cities in the U.S. with workers protesting in solidarity in 33 countries overseas. Yesterday, over 100 of these workers were arrested outside McDonald’s headquarters in Oakbrook, Illinois, as they brought their demand for $15 an hour and a union directly to the company’s doorstep.
McDonald’s has an opportunity today to assure shareholders that it’s committed to charting a new course, but doing so will require more than a new advertising blitz or clever PR strategy.
Instead, the company should use this shareholder meeting to acknowledge publicly what its mounting troubles over the past year have already made clear – that its business model has failed, and that it’s time to transition to a new model that pays a living wage.
By announcing a shift to a living wage business model, McDonald’s would be following in the footsteps of a growing number companies that have started to see the light. Earlier this year, The Gap announced that the company would be raising pay for all of its U.S. employees to at least $10 per hour by next year, calling the move a “strategic investment to do more for our employees” in order to “attract and retain a skilled, enthusiastic and engaged workforce.”
Similarly, Costco has for years embraced a business model focused on investing in its workforce, with entry-level employees starting at $11.50 per hour. This investment, moreover, has paid off, with market analysis showing that Costco generates nearly double the sales revenue per employee as its nearest competitor, the Walmart-owned Sam’s Club.
According to Salon, the author of this piece is a “policy analyst at the National Employment Law Project.” What I want to know is if he has ever run a business – any business. Whatever his background he sure has a strange definition of “utterly failed“:
The McDonald’s Corporation is the world’s largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries across 35,000 outlets.
A McDonald’s restaurant is operated by either a franchisee, an affiliate, or the corporation itself. McDonald’s Corporation revenues come from the rent, royalties, and fees paid by the franchisees, as well as sales in company-operated restaurants. In 2012, McDonald’s Corporation had annual revenues of $27.5 billion, and profits of $5.5 billion.
That $5.5 billion does not include the profits made by the 85% of the restaurants that are franchises. Either way, that’s a lot of moolah. Most failed business models don’t generate that kind of profit. Actually, most failed business models don’t generate any profit.
You can make the argument that McDonald’s can afford to pay their employees more money. You can even argue that it would be a smart business decision. But you can’t argue that what they are currently doing ain’t working.
It is not fair to compare McDonald’s to different kinds of businesses that use different business models. That’s like comparing apples to onions. A fair comparison would be to compare McD’s to Burger King or some other large fast-food chain but for some reason the author chose not to do so. Probably because they all pay the same minimum wages that my buddy Ronald pays.
What I can’t figure out is why Progs hate Mickey D’s so much. They hate the products that Mickey D’s sells even more than than they hate the way Mickey D’s does business. If they aren’t raging about the toys in the Happy Meals they are bitching about calories in the Big Macs. When all else fails the Progs start whinging about the environmental effects of Mickey D’s packaging.
I guess that cheap fast-food for the masses just offends the Progs’ ironic hipster snooty elitist sensitivities. Just as with Walmart, anything associated with the hoi polloi is just anathema to Progs. To a Prog, eating at McDonald’s is like buying coffee at a 7-11 or Dunkin Donuts. It can be done, but it must be done ironically.
Last but not least, what is the definition of a “living wage?” Who determines how much that is? If every employer pays (at least) that amount, what will that do to prices?
I keep asking this next question and have yet to receive any kind of serious answer: If increasing the minimum wage is such an easy, painless and beneficial thing to do why not raise it to $50 an hour?