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You probably remember Subway's famous "five-dollar footlong" promotion as much for the obnoxiously catchy jingle as for the sandwiches themselves. (Sorry for getting that stuck in your head all day.)
The sandwich chain recently resurrected the promotion in a national advertising campaign promising foot-long subs for just $4.99—but the special deal won't fly at one Subway restaurant in Seattle, where owner David Jones posted a sign this week giving customers the bad news.
Sadly, the consequences of high minimum wages, excessive taxation, and mandate-happy public policy are not limited to the death of cheap sandwiches. The cost of doing business in Seattle is higher than the Space Needle, and the unintended consequences of those policies are piling up too.
The biggest cost driver, as Jones' sign mentions, is Seattle's highest-in-the-nation minimum wage. It went from $9.47 to $11 per hour in 2015, then to $13 per hour in 2016, with a further increase to $15 per hour planned.
The result? According to researchers at the University of Washington's School of Public Policy and Governance, the number of hours worked in low-wage jobs has declined by around 9 percent since the start of 2016 "while hourly wages in such jobs increased by around 3 percent." The net outcome: In 2016, the "higher" minimum wage actually lowered low-wage workers' earnings by an average of $125 a month.
And now those same employees will have to pay more for sandwiches from Subway—and everything else too.
(Score: 2, Insightful) by Anonymous Coward on Saturday January 13 2018, @02:11PM (2 children)
You've never run a business have you? Deduct sales taxes and divide by 3 (profit, cost, wages) and you're left with around $1.50. Every Subway I've been in has a sandwich maker (usually more than one) and a clerk to take the cash. That $22 wage bill requires 18 footlongs to be sold an hour, every hour. A footlong every 3 minutes and would you like it toasted? With a wage of $11 an hour, you get that volume of sales or you close the business. They're not getting that sales volume all day are they?
(Score: 1, Insightful) by Anonymous Coward on Sunday January 14 2018, @03:40AM
Ok well pretend that they dedicate a third to wages. That's $1.67. For 22 hours of wages you only need to actually sell 13.2 sandwiches. This also doesn't include the high profit items of fountain soda and cookies. Which cost cents per oz and are sold for dollars. But we'll continue with the example as stated and pretend no one wants to wash down their stale bread with anything. The only have to sell one every 4.5 minutes. Add back in the Soda, cookies, and even the low cost subs like the vegie and your probably only having to make a sandwich every ten minutes to stay profitable.
Lets do another thought exercise. Lets raise those employees wages to 15 an hour.
Now you have to make enough sandwiches to cover $30 dollars of wages. At that rate you need to make 18 foot longs an hour. Surprise. Thats the number you came up when you rounded. Wait whats that, the $4 an hour was a FUCKING ROUNDING ERROR. Just give them the $15 dollar wage. Your own math proved it is nothing but a rounding error.
I cant find good stats on it but from what I could find an average subway sells 400-500 subs a day. Say they are open for 12 hours, two employees working the entire time (although early and late its often only one) You are talking $264 in wages if they get paid $11 an hour. And $360 if they are getting paid $15. For a total difference of $96. If you split that up among 400 sandwiches you only need to raise the cost of your sandwich $0.24 a piece. Shit that is passing THE ENTIRE COST to the customer, and its so little THEY WONT EVEN FUCKING NOTICE.
Quit being a pinch penny, raise the cost of the sandwich 0.25 and give your employees enough money to live off of. Hell you even get to pretend to be the fucking good guy, and you haven't cut profit one single cent!
(Score: 0) by Anonymous Coward on Monday January 15 2018, @06:07PM
This argument is wrong on the face of it, because subway sells more than just sandwiches. Some of those items have much higher margins.
If people buy pop or coffee with their sandwich then the required sales volume goes down significantly.