Home » Behavioural Investing » Why Labour Costs are not Black Swan Events for #QSR $MCD $BKW $WEN $YUM

Why Labour Costs are not Black Swan Events for #QSR $MCD $BKW $WEN $YUM

A lot of noise coming from unions about organizing low wage employees at Quick Service Restaurants. Quick math shows the industry cannot pay $15 plus rich benefits. Will creeping unionism hurt Quick Service?

Answer: No

Quick Service Restaurants are factories and subject to much process engineering. If wages become a problem watch for more or revamped machinery and processes and less labour. This will cause existing workers more job loss.

Part of the organizing dynamic is many QSR employees have become trapped because competitive better paying jobs are not as available. As the economy improves ever so slowly this rationale should dissipate. Previous efforts to organize were hampered by huge turn over rates. Corporations can drive those rates and turn employees in many ways. Cutting back hours and closing a few locations is one. Selective termination of union activists while dirty pool is another.

Wal-Mart has been known to close stores that unionized and everyone is out of work. QSR can easily close locations and laugh it off.

In the mean time a few headlines here and there but this will not be a factor in a buy hold or sell decision.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter @financialskepti