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So if I do the math, he only sells on average 3 sandwiches per hour. He should probably not be in business if that is all he is selling.
Only if the sandwich is 100% profit. But he has to pay for the ingredients, the rent on the shop, insurance, utilities, maybe advertising, inventory shrinkage, equipment to make the sandwiches, and wages.
The paycheck is not the only cost of employees. He has to pay for liability insurance for the employee, probably health insurance for the employee, disability for the employee, social security tax for the employee, an accountant to figure the employee's wages, liability insurance for himself in case the employee sues him.... and on and on, including expenses like maintaining a parking lot for the employees to park in, which is not a cheap thing to do.
Employees aren't paid out of the clear blue ether. An employee must generate enough value for a business to pay for his own salary. Employers can not keep employees that do not add that much value to the business.
(seriously, I despair for the education system in this country. Someone learned the math skills in our education system to determine that a business only needs to sell three sandwiches an hour to stay in business? I hope that person doesn't try to open a small business of their own.)
If this restaurant targeting the demographic of lower income, then higher MW means you customer base has more purchasing power, and this restaurant needs to take advantage by selling more covers/food. If you cannot attract this new supply of customers, then you stink, and should go out of business.
If this restaurant a fine dining establishment, than surely you can afford a small blip in MW. If not, then you probably are not getting that many customers, and are dead weight. You should stop, and free up the real estate. More commercial RE available, means more bargaining power for the next restauranteur up looking for a place.
I know, I know, Restaurants are low margin. The fact many places are oversaturated with eating establishments has a lot to do with that.
Those little local restaurants with just 3 or 10 employees are not going to make it on tech workers only, especially being in a more industrial area. They need the patronage from the service and retail industry workers to survive and those people cannot afford $15 salad. These are not "destination" restaurants, and the locals (Emeryville) only have a median family income of $69,000.
They need to sell more salads is all. They dont have to price the salads $15. If they arent already, then their business is likely not doing that well anyways.
Either improve or if owners insist, they can do all the work themselves, and no payroll.
No $15 salads, nope nope. I won't even go above $10.
Also, I had to look at a map for Emeryville since I've never heard of it... it's a very small area with a population of only 10k. I feel like the obvious answer is to... move. It's not SF, so I'd assume that if you work in Emeryville, it's an easier commute from elsewhere. Let the tech workers have the place and see what happens. The European model, to my knowledge, is that the rich seem to live in the city center, and it gradually lowers in social economic status as you get away from the core. We don't seem to do that, or in the very least do it well, in America. Probably a first step would be to focus on our infrastructure and zoning to create more sustainable cities.
I've seen a lot of restaurants close, raise their prices, or both over here in NYC after the $15 min wage. I have a feeling it's more complex equation than people are giving credit to and other factors are being ignored like really really high commercial rental costs.
Are you still in the LES of NYC?
Any good salad at any good restaurant is already close to $15. With romaine, and not iceberg, some arugula, etc etc, in Queens even costs $15 or more.
I just paid $12.50 for a small salad in Columbus OH. Literally like half an hour ago.
The cost of everything is really going up. Low inflation my butt. Most hurt are the lower wage earners. Increasing min wage will only further increase the push toward automation.
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Here the salads at better (not fast food, not fine dining) restaurants are running $8-10, and our state minimum wage is $12.
Even at the fast salad place here in Sammamish (Evergreens Salad) the sales are $9, addition of proteins is $3 (each).
Those little local restaurants with just 3 or 10 employees are not going to make it on tech workers only, especially being in a more industrial area. They need the patronage from the service and retail industry workers to survive and those people cannot afford $15 salad. These are not "destination" restaurants, and the locals (Emeryville) only have a median family income of $69,000.
Simple Economics.
Either the cost of living comes down or wages go up.
Boot out the illegals and it will put upward pressure on wages.
Either that or cheap labor also moves out of the area along with cheap fast food and restaurants going out of business.
Far more goes into that local cost of living than the minimum wage. Housing costs are largely a function of inadequate supply due to restrictive zoning laws.
Only if the sandwich is 100% profit. But he has to pay for the ingredients, the rent on the shop, insurance, utilities, maybe advertising, inventory shrinkage, equipment to make the sandwiches, and wages.
The paycheck is not the only cost of employees. He has to pay for liability insurance for the employee, probably health insurance for the employee, disability for the employee, social security tax for the employee, an accountant to figure the employee's wages, liability insurance for himself in case the employee sues him.... and on and on, including expenses like maintaining a parking lot for the employees to park in, which is not a cheap thing to do.
Employees aren't paid out of the clear blue ether. An employee must generate enough value for a business to pay for his own salary. Employers can not keep employees that do not add that much value to the business.
(seriously, I despair for the education system in this country. Someone learned the math skills in our education system to determine that a business only needs to sell three sandwiches an hour to stay in business? I hope that person doesn't try to open a small business of their own.)
Assuming the business is already making a profit that allows them to stay in business before the MW increase. The extra 1,50 will be pure profit that goes directly towards paying 3 workers the extra hourly wage.
X*(16.50-15)=3*1.5
This includes an extra .20 for fica and payroll taxes. This assumes that the cost of the sandwiches (variable) and the fixed costs(rent, heat, insurance, etc) stays the same.
If they increase the sandwich by $1.50 and sell 20 sandwiches an hour( X=20), they will make an extra $30 an hour and only need to payroll increase of 4.50 an hour so increase profit by 30-4.50=26.5. If they sell 20 sandwiches an hour, they need to increase the price by 23 cents to meet the increased payrate amount for 3 employees, rounding up - do you need me to write the calculation?
6th grade pre algebra in this country.
Last edited by foodyum; 08-14-2019 at 09:31 AM..
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