Fast-food workers across the U.S. are protesting for higher wages but it's unclear where the money would come from or the effect it would have on the economy.
More than 90 percent of McDonald's and Burger King locations in the U.S. are owned by franchisees who say they have to worry about making rent, buying supplies, paying workers and shelling out royalties and fees to their parent company for use of their name and brand. Franchisees say they have to do this while trying to eke out a profit on the super-cheap menu items that customers have come to expect.
Franchisees say their profit margins are thin — they make 4 cents to 6 cents on average for every dollar they take in — and that they can't afford to hike pay, particularly at a time when companies are trumpeting value menus amid heightened competition.
Last year, the five big publicly traded fast-food companies together earned 16 cents in profit for every dollar of revenue.
That's 73 percent better than the average big U.S. company, according to FactSet research firm. And that compares with earnings of 4 cents for every dollar of revenue made by discount retailers Wal-Mart and Target, which also have come under fire for not paying workers enough.
"This all comes back to the consumer," says Adams, the former McDonald's franchisee turned consultant.
Although many Americans say they support higher wages for workers, the reality is that people flock to the cheapest meals, which cut into profits. It's why fast-food chains have been stepping up deals and promotions in the weak economy.
Consider the series of protests over the past several months that began last November in New York. Despite the widespread media attention, the turnout has been mixed and it's not clear what impact, if any, they've had on business.
When the demonstrations arrived in St. Louis, for example, organizer Rev. Martin Rafanan said about 100 workers and supporters protested at around 30 locations. That meant they were spread relatively thin, and no stores had to shut down as a result. There's been greater support in other cities including Seattle, where protests ended up temporarily closing down a Burger King and other stores, according to local reports.
Imagine that, Seattle ... Home of the $3.50 Cup of Coffee.