Dangers of $15/hr and the 2 things we really want.

Let’s say a single unit quick-service restaurant is open 12 hours per day, seven days a week. Minimum staffing consists  of:  (2) prep cooks for five hours in the morning, then (3) line cooks and (3) cashiers in the building from open to close. The pain is distributed thusly:

(2)Prep cooks @ $15/hr.  for five hours = $150

(3)FOH  (3)BOH @ $15/hr. for twelve hours = $1080

Labor cost for the day is $1230.

 

If I want my labor expense to come in at palatable 30% I need $4100/day in sales. This is an aggressive number for a business that isn’t open twenty-four hours, with no liquor license or drive-through window.  Many independent/ Mom and Pop operators fall into that category. $4100 a day, seven days a week. Using this example payroll comes in at $36,900/month which is 30% of $123,000 that number being  our monthly sales target. Depending on the city’s population that could be tough for any number of concepts. Yes you could attempt to operate with fewer personnel but they will eventually burn-out and leave for an easier job. Or, with too few people the service and execution in the kitchen gets sloppy.  You’ll also have to consider the inevitable call-ins, no shows, and illnesses. So we’ll stick with needing those eight people at minimum.

The reality for some operators is there are days (especially in Winter)when total sales are less than the day’s labor expense. However over the weeks and months it usually corrects itself and the proper sales/labor/cost-of-goods ratios emerge to make being in the business worthwhile. A minimum wage of $15 at best would severely diminish an owner’s profit margin and in many cases wipe it out entirely. Before you say “raise your prices” you’re assuming people will pay those prices and the concept can sell the new value proposition. This is the danger for the operator.

If this were my scenario (which it is) there’s a simple solution: Get out immediately because in the long run the math won’t work in my favor.  Do not cry for me because as an entrepreneur that’s the risk I took.  But forget about me.  The real danger of setting a wage at $15 or even $20 lies with the worker. Here’s why.

We must first determine what “money” actually is.   Debits and credits and promises to pay are just digits viewed on computer screens. Numbers printed on slips of paper that themselves mean nothing unless traded for something are worth losing one’s freedom or even death for some people. A  credit score of 487  instead of 784 drastically affects borrowing power.  Therefore, a three digit number associated with your name is the primary screening tool determining how much you can be trusted.  A family of four with a household income of $300,000 lives very differently if we remove a zero from that number. Big  salaries, high credit scores and low interest rates  are generally associated with comfort while low wages, high interest rates and bad credit usually equals discomfort. Education levels or specific skill sets can have an effect on the numbers but not always. We are trained to chase numbers. Regardless, in my opinion what people really want are two basic things:

  • Choices
  • Experiences

That’s it.

I want a choice in where I live or where my child goes to school. I want more choices when it comes to a career or what I do with my free time.  I want choices with respect to where I shop, what I eat, etc. I want the best choices when it comes to doctors or medicines.

And before I die I want different experiences as well.  I want the experiences of travel,  or raising  a family or mingling with interesting people. I want the experiences of a break from routine. I want the experience of being free from worry. You get the point.

On the surface,  the better our “numbers” the broader our choices and experiences; the ability to access them gets easier.  So naturally going from $9 to $15 gives the feeling of “movin’ on up.”

The danger for the worker is now they’ve mentally pre-set an arbitrary number to their worth.  15, 9, 22 it doesn’t matter. Which is the problem with the way we think. “If I could only get to $15 things would be sweet.” “If I could make 50k, 100k” etc. Why attach a number? Maybe the goal setting should be the choices and experiences themselves not a dollar amount. We all read  about people being miserable and going broke on 200k/yr while others are living rich, fulfilling lives on their terms whose incomes are a fraction of that.

Finally there’s the danger to both the worker AND the owner.

While we personally couldn’t maintain a $15/hr payroll a conglomerate or other large ownership group easily could.  They can show a 2% profit (or even a loss) and continue to operate or borrow “money.”  And as these groups merge, grow, and diversify into foodservice, real estate, retail, even medicine and dentistry the independent operator/licensed professional will find it harder to compete, be it on price, benefits or wages.  He or she is forced to close their doors and now join their former employees where everybody makes close to the same thing. If you watch any dystopian cinema or  TV they aren’t that far off. In the future we all work for XYZ Corp and do as we are told.

No owner wants their team to suffer unnecessarily because they can only afford to pay them 8 or 9 bucks an hour.  They’re invaluable to staying open.  Hell, for the best ones, an owner will even open a store for them -and let them keep most of the money. Why shoot for $15/hr and not $15000 a month?

When I’ve set goals for a choice or experience and they’ve manifested I never thought about specific numbers I needed beforehand. Somehow they  worked themselves out because if I overthought them there was never going to be enough “money.”  In the big picture $15 an hour is aiming low, if that should even be an aim. If it’s decided from this point forward in your life you want warm sand between your toes every January trust me you will find a way to make that happen!

 

Cheers

Elegant French Toast

  • (2) eggs
  • 1 T sugar
  • 1/4 t cinnamon
  • 1/2 C milk
  • 1 T Grand Marnier (or to taste)
  • 1 T grated orange peel
  • 1/4 t vanilla
  • 2 T butter
  • 6 slices French bread
  • confectioners sugar

Lightly beat eggs; beat in sugar, cinnamon, milk, Grand Marnier, orange peel and vanilla.  Place bread in mixture and refrigerate overnite. Next morning melt butter in skillet.  Add bread and grill until golden.

Serve with confectioners sugar on top and fresh fruit.

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