Quote:
Originally Posted by MotorHead
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McD's has some major problems operating in a rising labor cost market.
First, there's the menu and its price structure. There is a "value" section of the menu and there is all the rest of the menu. When prices are increased on the rest of the menu the return from that increase is reduced by trade off to the value items.
This makes it harder to keep the value items priced low. Eventually "value" has to be redefined. You may recall the McD's "Dollar" menu. Now it is "$1, $2 and $3" value menu.
The second and in my view bigger problem, is the quality of execution when each labor hour costs so much. To provide fast, accurate and friendly service there needs to be adequate staffing. Herein lies the dilemma. Hourly pay that is too low can result in understaffing. Raising wages to an attractive level can bring in more bodies but there is no guarantee that the additional employees improve results. The cost to train them becomes higher and there is a temptation to minimize the hours spent doing so.
If the pool of available workers does not increase you just end up with the same tight staffing and mediocre execution but at greater cost.
This situation is worsened by the current government sponsored couch careers.