Simple financial analysis & investment research

McDonalds McWages are too high and need immediate reduction

by August 4, 2013

McDonalds McWages are too high and need immediate reduction!

McDonalds wages are too highDemonstrators protesting low wages and the lack of union representation in the fast food industry stand outside McDonald’s in New York. (Credit: Reuters/Lucas Jackson)

McFastFood workers are rioting and striking for higher wages.
Our analysis a few weeks ago indicated that McDonalds is not in good health (sic!):

Shrinking golden arches: despite continuing restaurant additions, and reimaging efforts, sales are weak, and weakness is expected to persist.

A few ideas from our published analysis:

  • Despite 1,135 net traditional restaurants added in 2012, sales, margins and profits are slowly declining.
  • Management motivated the decline by “challenging eating-out environment”[…].
  • Whether efforts to increase sales will pay off, there remains to be seen.
  • For the time being, we see no effort to improve margins and operational efficiency, while continuous reimaging is dragging down the cash.

We always wondered why all these fast food workers will not just go out and find their dream job paying top wages.
Probably because McWorkers just can’t find a higher paying job – lacking education and skills surely qualify these persons for McJobs paying McWages.
Such McJobs are ideal for teenagers and students – generally people beginning their careers.
Besides beginners, if someone still works at a fast food (excluding managers of course), such a person must be lacking skills severely.

McDonalds is already struggling and is very unclear whether it can absorb a wage increase.

Recently reported quarterly results indicate continuing difficulties:
McDonalds Financials Q2 2013 – sales and income relatively flat.

If wages are raised, fast food costs go up, prices shoot up, sales tank, and McWorkers get pink slips.

Wouldn’t be simpler if those protesting people would just fire themselves to save the efforts? The net result is the same.
In the end, if their riots and strikes would succeed, the net result would be less McDonalds, less jobs, and massive firing.
All the rioting people would better use their time in learning some new skills, skills that would qualify them for better and higher paying jobs.

And even a better option: McStrikers could just open their own restaurants, and they can pay themselves any salary they desire, even lavish CEO salaries!

Not joking – albeit it’s always easier to scream and shout than do some serious business.


My comment: