It’s the Top Line, Stupid
Would you like to learn how to manage rising labor costs? We’ll let on in a minute.
But first we want to note that it was no accident that Fight for $15 protestors paraded last Thursday past one of the most iconic restaurants in the Windy City — McDonald’s. Many, after all, held signs that said “McJobs cost Us All!” City police, meanwhile, cordoned off the protest route, keeping cars (though not onlookers) at bay. It seemed anyone could join the large and loud group.
Results Thru Strategy doesn’t take sides on the minimum wage issue (though to be sure our clients do). Our own sympathies lie all along the spectrum, because we’ve been hourlies and managers. So we understand the challenges of low pay, on the one hand, and slim margins on the other.
Which is why we were intrigued by Popeyes CEO Cheryl Bachelder’s remarks during a Fox Business interview yesterday. She said workers deserve a “fair wage,” customers a “fair price,” and franchisees a “fair profit.” She then suggested that $15 an hour would likely force her company to lift prices and/or trim employees’ hours.
“Neither of those are good,” she lamented, adding her preference was that the minimum wage rise slowly. “And all three parties are served well.”
Not that we blame the CEO of the country’s second-largest chicken chain for a lack of specificity. State minimums are all over the map ranging from California’s $10 an hour to Wyoming and Alabama’s $5.15 an hour. Curiously, five states have no minimum wage at all, including Louisiana, where Popeyes is headquartered.
Yet we think her most telling remarks begin at about the 1:30 mark. Asked how Popeyes intends to maintain its swelling stock price (PLKI) despite increasing labor costs, Bachelder quickly notes that Popeyes AUVs have increased from $1 million to $1.4 million over the past few years and that franchisees are adding restaurants apace before offering a piece of crucial wisdom: “The key is to grow your top line sales.”