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View Diary: Dear Food Service Employers, (239 comments)

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  •  ummm if he has 43 (10+ / 0-)

    restaurants that cannot clear $175 k in profit I am starting to wonder where his money goes.

    •  Many restaurants can't even turn a profit (2+ / 0-)
      Recommended by:
      Sherri in TX, kyril

      Check out the Grub Street blog on NYMag. So many restaurants can't even turn a profit so making $175k profit a year is at least making some money on top of expenses.

      •  I know it's hard to turn profits on restaurants (4+ / 0-)

        for the small restaurant owner. However this is a franchisee of a major chain, if he has that many that are not turning a profit but can continue to own them, that is where I am confused.

      •  fair enough (0+ / 0-)

        but then why do these people get multimillion dollar salaries?

        •  It's their business (1+ / 0-)
          Recommended by:
          Sparhawk

          They took the risk and did the work to put together a plan, gather funds through loans and investors and devoted their lives to building a business that provides a service or a product that people want.

          Why shouldn't the person who created the business have $2M a year?

          If you divide that $2M across the wait and kitchen staff (considering that his 40 restaurants provide him $2M in profit), he'll have no profit with such thin margins, and have no incentive to open more restaurants.

          That's probably the reason he owns 40 restaurants to give him more profit that he desires, realizing that each restaurant has such thin margins of profit.

          With 40 restaurants, he hires 40 more times the people than a single franchisee does.

          You can start your own franchise restaurant, too. But you have to take a risk of losing everything like he did.

          •  That may be true of Denny's since (1+ / 0-)
            Recommended by:
            duhban

            they have crappy food but no way is it true of Applebee's. Their staff is well trained to push drinks, desserts and additional items to increase the ticket. I have been to Applebee's in several states and they were always busy, any time of day. Restaurants have also been raising prices due to rising food costs but if they can't make a go of it without paying a living wage to their employees, I'd rather they go out of business.

            •  So no one should work? (1+ / 0-)
              Recommended by:
              Sparhawk

              So instead of hiring 80 people and paying them a wage they can accept, you would rather they hire just a few so just a handful can make more to live on?

              A business can't pull out more money than it brings in. Restaurants and other food-based businesses have very thin margins.  To pay staff a wage where they can have full benefits and raise a family is impossible.

              Raising prices is also impossible. Restaurants are already suffering decreasing visitors because they had to raise prices when food became more expensive -- and it's not possible to raise prices enough to give workers owner-sized salaries.

              Consider this: labor costs for Darden restaurants (Olive Garden, Red Lobster, Lone Star Steakhouse) as a percentage of sales were 31 percent during the last quarter. This is not miniscule.

              For every item you buy at one of those restaurants, 31 percent of each one of your dollars goes into labor costs. That's just a minimum wage job!

              You can imagine the food, land and property take even more of the percentage of every dollar. When you look at it this way, you can clearly see the razor-thin margins. In fact, investors never know if Darden will make money or not, quarter by quarter and always seem surprised when they do.

              To prefer a business shut down because they can't afford to pay every employee a wage that keeps them working the same job for the rest of their lives isn't fair to Americans who want the experience and knowledge of working in a restaurant.

              •  Bullseye (0+ / 0-)

                 You've pretty much hit right on the real meat and potatoes of this issue (if you'll excuse the pun). The labor cost paid by a restaurant is the single most important factor that determines it's profitability and it's continued existence, and also largely determines how it's perceived by the consumer market at large, for better or for worse.    
                  This is an issue that affects all restaurants, whether they're part of a franchise chain or not, and no matter what kind of food they serve, or where they're located. No restaurant owner can jeopardize the very existence of his own business by paying wages that are so high that they make it almost impossible for the business to clear a profit, but they also can't pay wages that don't attract decent employees who really want to contribute to the business and keep customers coming back to it on a daily basis. It's a very tricky balance, and people today, for whatever reason, just cannot seem to get a realistic grasp on simple business economics without introducing all sorts of inappropriate expectations or conflating socioeconomic issues that aren't necessarily as closely related as they would appear through the haze of the consumer transaction process.
                  Do we want our restaurant employees to have a decent standard of living? Of course we do. But do we want them to work in the same industry forever because there's no economic incentive for them to ever look beyond the next horizon? No, hardly.
                  Personally, I think the real reason Americans pile so many unrealistic expectations on the restaurant industry is simply because we love to eat, and we expect that our fascination with food will be reciprocated by high wages, which is not necessarily appropriate. We love the whole restaurant experience so much, because it feels like the reward we've earned by being good obedient worker bees, that all sense of economic proportion regarding the transaction as a whole just goes right out the window. And this is all symptomatic of the whole 'carrot on the end of the stick' mentality that we as Americans have adopted through many decades of capitalist conditioning.
                  Anyway, I could go on all day about this issue, because I've worked in the foodservice industry for many years, at all points on the ladder, from dishwashing up to management, and I've gotten a pretty thorough education on the whole restaurant customer mindset.  The point I'd just like people to take away here is simply this: take your food seriously, but don't expect too much from the restaurant industry. Cook your own food, and treat it with respect. And don't expect any one industry to assuage your concerns about the whole state of the world today, because that's never going to happen.

          •  nonsense (0+ / 0-)

            if the business is barely breaking even it is an incredibly stupid idea to be giving yourself millions of dollars by screwing over your employees. Who do you think handles the food? Has the day to day interactions with your potential customers? Without employees you have nothing

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