Hmmmmmmm
Where do I start?
McD's has had significant wage increases just to get enough staff to keep the doors open.
Payroll expenses including social security, Medicare tax, unemployment tax and workman's comp insurance are all based on payroll dollars.
With the increase in payroll dollars these expenses increase as well.
The backdoor cost of food and paper items is up significantly.
What is in the cases, beef, chicken, pork and potatoes became much more expensive as you have no doubt seen in your own shopping cart.
Bringing the cases to McD's got more expensive too due to the doubling of the price of diesel fuel and increased wages paid to the truck drivers who are a scarce commodity now.
Then there are the utilities.
Gas and electric cost is up or going up soon.
These are used for cooking, heating and cooling the building.
Fun fact:
While the air in your home may turn over about two or three times a day, a McD's turns over its air about every three minutes!
That is because the exhaust fans must keep cooking odors, gas combustion fumes and grease vapor from clouding up the store.
All that air needs to be replaced with clean (it goes through filters), conditioned (heated or cooled) air.
The economic model that has served McD's so well is challenged in these circumstances.
The price delta between McD's and the next level up in the restaurant business is getting tight but for many, convenience still favors McD's.
Weak execution will have customers looking elsewhere fast at these prices.
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