The Best Reason For Fast Feeders To Up Wages in Corporate Stores

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Even before election day in the U.S. was – thankfully! – fast approaching, a number of fast food chains were anticipating the success of minimum-wage-raising ballot initiatives in various states … and going ahead on their own to better compensate their workers.

An article today (Oct. 31) in South Florida Business Journal (and, no doubt, in other publications from the same company), before noting that both McDonald’s and Starbucks had recently announced raised wages for workers in company-owned stores, cited perhaps the best reason for other companies to make similar moves: The paper quoted Sonic Drive-In CEO Cliff Hudson as saying his company expects to improve sales by paying managers higher wages and hiring more full-time workers and, as or more important, he anticipates the company’s action will encourage the franchise owners of 95% of Sonic locations to follow his lead.

Business Insider noted that while such initiatives may seem counter-intuitive for a business that depends on low-cost labor in an industry where thin profit margins make it difficult for franchisees to either up wages or cover health care insurance, Sonic’s Cliff Hudson says that his company’s research has proved that investing more in labor is necessary if the chain wants to compete in a crowded industry.

“We’re just trying to show [franchisees] this can be a win-win deal, if it’s done right and it’s done well,”  Hudson  said, referring to the chain’s plan to increase its number of full-time employees.

With 95% of Sonic locations being franchises, Hudson can’t automatically raise wages at Sonic restaurants. However, he said, the company can try and convince franchisees that doing so would be financially beneficial. Hudson said raising wages was a major topic of discussion at the company’s annual franchisee meeting in September.

There’s also the argument that better-paid workers should be happier in their jobs and, thus, be more likely to provide better customer service. Similarly, better-paid managers would, you’d think, be motivated to work harder at find ways, within their limited playbooks, to encourage workers in that (better customer service) direction.

And if raising wages for workers and managers leads to marginal increases in prices to customers, let’s be realistic: Most people who regularly eat fast food aren’t going to be put off by a nudge up in the price of a burger, fries or a soft drink. Most of those customers are in the fast food place in the first place for one of two reasons: Either they don’t see themselves have a choice or where or how to spend their food dollar, and/or they simply like the food.

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