Questions for Fast Food Franchisee Owners - How high can you pay your employees and still turn a profit?
For those of you that own one or many fast food franchises, how much could you in theory pay your hourly employees before the business becomes unprofitable?

Know this varies a ton by location and brand and such but curious - could you for example pay all employees $25 an hour and still turn a profit?
[{"id": "ig1xrh7", "text": "Will depend on sales. Underwriting fast food deals, 8-10% for rent and 20-40% for labor is what it takes to pencil out. \n\nOften this ends up with the franchisee and his family working there, since they are not restricted to minimum wage laws. \n\nAnd total compensation will also be wage, plus taxes, plus insurance plus benefits, workers comp, so if it is $25, then the total hourly is more like $32-$36. \n\nSo for each employee you need $180 in sales to be on the good side. If you have 5 employees that is $900 in sales an hour, times 11 hours that is $10k a day in sales. At $20 for an average order that is 45 orders per hour. \n\nYou need some pretty good traffic to do that. So maybe you only need 4 people to get the numbers to work out. If someone calls out, can you do it with three people? \n\nLet\u2019s work backwards. \n\nIf your average McDonald\u2019s is doing $2.4 million in sales a year, a max of 960,000 is spent on labor. You are open 350 days a year, that is $2,700 a day in labor, let\u2019s say this is a 24 hour McDonald\u2019s, so that is $114 an hour, divide by 4, that is 28 an hour, divide that by 1.5 and you get $19 an hour.", "replies": [{"id": "ig299jl", "text": "Excellent answer. Thanks for the explanation.", "replies": [], "depth": 2}, {"id": "ig2jjfh", "text": "This guy maths.", "replies": [], "depth": 2}, {"id": "ig2kqka", "text": "Great logic flow! Smart!", "replies": [], "depth": 2}, {"id": "ig2tgid", "text": "This guy f\u2026.ranchises", "replies": [], "depth": 2}, {"id": "ig2up5s", "text": "Wonder what a In and Out does here in California. Always busy. Pays good. Well trained.", "replies": [{"id": "ig63sa5", "text": "When I lived in So Cal at dinner time the local in n out almost always had at least 20 cars in the drive thru.", "replies": [{"id": "ig6iwl3", "text": "Always the busiest fast food restaurant. Not a franchise as well.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "ig2z4r7", "text": "I'd love to read the post thread for this, posted in r/antiwork", "replies": [], "depth": 2}, {"id": "ig32txx", "text": "Fuck you I downvoted *wink*", "replies": [], "depth": 2}, {"id": "ig34ezp", "text": "Why did you divide by 1.5 at the end?", "replies": [{"id": "ig39yw3", "text": "Taxes, insurance, and benefits. See paragraph 3", "replies": [{"id": "ig4rg1h", "text": "Ah got it. Thanks.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "ig3gt5z", "text": "Nice work. This belongs in r/theydidthemath", "replies": [{"id": "ig3gtx1", "text": "Here's a sneak peek of /r/theydidthemath using the [top posts](https://np.reddit.com/r/theydidthemath/top/?sort=top&amp;t=year) of the year!\n\n\\#1: [One 9 inch pizza vs two 5 inch pizzas](https://www.reddit.com/gallery/vod31t) | [3003 comments](https://np.reddit.com/r/theydidthemath/comments/vod31t/one_9_inch_pizza_vs_two_5_inch_pizzas/)  \n\\#2: [\\[Self\\] If you blended all 7.88 billion people on Earth into a fine goo (density of a human = 985 kg/m3, average human body mass = 62 kg), you would end up with a sphere of human goo just under 1 km wide. I made a visualization of how that would look like in the middle of Central Park in NYC.](https://i.redd.it/elycytqlc8g71.jpg) | [3203 comments](https://np.reddit.com/r/theydidthemath/comments/p0qws3/self_if_you_blended_all_788_billion_people_on/)  \n\\#3: [\\[request\\] Is this claim actually accurate?](https://i.redd.it/32dd5fk73zp81.jpg) | [1308 comments](https://np.reddit.com/r/theydidthemath/comments/tpqepl/request_is_this_claim_actually_accurate/)\n\n----\n^^I'm ^^a ^^bot, ^^beep ^^boop ^^| ^^Downvote ^^to ^^remove ^^| ^^[Contact](https://www.reddit.com/message/compose/?to=sneakpeekbot) ^^| ^^[Info](https://np.reddit.com/r/sneakpeekbot/) ^^| ^^[Opt-out](https://np.reddit.com/r/sneakpeekbot/comments/o8wk1r/blacklist_ix/) ^^| ^^[GitHub](https://github.com/ghnr/sneakpeekbot)", "replies": [], "depth": 3}], "depth": 2}, {"id": "ig4a4gi", "text": "When underwriting, what % do u typically use for profit and Franchisor fees?", "replies": [{"id": "igq3ve8", "text": "Circling back\u2026 I guess the Franchisor says, it\u2019s co, it\u2019s pay whatever you want\u2014I hate money anyway \ud83e\udd23\ud83e\udd23\ud83e\udd23\ud83e\udd23\ud83e\udd23", "replies": [], "depth": 3}], "depth": 2}, {"id": "ig4sff0", "text": "&gt;Often this ends up with the franchisee and his family working there, since they are not restricted to minimum wage laws.\n\nAs a non franchise small business owner, I feel this one LOL\n\n&amp;#x200B;\n\nSeriously though, I've been looking for a discussion like this for years...No one ever wants to run through the numbers.\n\nSide question - is there any metric for increased sales as a result of higher wages. For example, you pay $35/hr or even $45/hr and can attract a better class of workers who are highly motivated.  Wouldn't losses/errors decrease and revenue increase as people make fewer mistakes and reviews/reputation improve?\n\nI'm thinking of something like Chik-Fil-A, but turned up to 11. If I had millions to waste, I'd love to try this experiment.", "replies": [{"id": "ig4w8jz", "text": "There is a famous study where you have two states and one raises the minimum wage and the other doesn\u2019t. What happens on the borders where there is no friction? Does prices go up in one state? Do people migrate across the border to the other? \n\nThis natural experiment happened and here are the results https://www.nobelprize.org/uploads/2021/10/popular-economicsciencesprize2021-3.pdf", "replies": [{"id": "ig4wv21", "text": "Thanks I'll check that out!", "replies": [], "depth": 4}, {"id": "ig5fcfe", "text": "What\u2019s the tldr there?", "replies": [{"id": "ig5fkls", "text": "Did not find a statistical difference in the unemployment rate or in food prices between the two groups. Basically raising the min wage 20% had no measurable impact.", "replies": [{"id": "ig5frv1", "text": "So the owners just ate the additional expenses?", "replies": [{"id": "ig5hbjz", "text": "Prices were raised to compensate. \n\nFrom the paper: https://davidcard.berkeley.edu/papers/njmin-aer.pdf\n\nWe also find no evidence\nthat minimum-wage increases negatively\naffect the number of McDonald's outlets\nopened in a state.\nFinally, we find that prices of fast-food\nmeals increased in New Jersey relative to\nPennsylvania, suggesting that much of the\nburden of the minimum-wage rise was\npassed on to consumers.", "replies": [{"id": "ig5oilc", "text": "Nice, thanks for this!", "replies": [], "depth": 8}, {"id": "ig5ole2", "text": "This is fascinating, thanks so much for sharing and summarizing", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "ig4w8gf", "text": "Great response thank you! Another question since you seem pretty knowledgeable - how do you respond when people say things like \u201cwhere did all the workers go?\u201d in relation to the recent staffing issues since COVID? My friend thinks they are all sitting at home and I tell him no they just have more options and can often find jobs that pay more.", "replies": [{"id": "ig5hth2", "text": "People died, people retired, and there are not immigrants to replace them. Everything is going to be more expense, in short supply and worse. And it will be this way forever. Things will always get more expense and customer service levels will always get worse and it is due to demographics. \n\nSo many people retired, so those workers that left are boomers, not kids sitting at home. \n\nhttps://www.youtube.com/watch?v=BnDjNpjRuAQ", "replies": [], "depth": 3}], "depth": 2}, {"id": "ig5i0j4", "text": "Good to see someone demonstrating essential basic business and math skills.  This is true for any service business.  Not sure why some comments suggest this is some sort of secret to a business.", "replies": [{"id": "ig5iamt", "text": "Sir, this is the Commercial Real Estate Sub, it is filled with mouth breathing brokers. The jocks always need nerds like me to do their homework :)", "replies": [{"id": "ig5jeu0", "text": "That makes complete sense.  Well said.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ig3zfro", "text": "I know a guy who was making about 15-23% profit after all expenses owned 6 Mcd", "replies": [], "depth": 1}]