What McDonald’s Minimum-Wage Hike Means for QSR Brands

If McDonald’s acts as a bellwether for the QSR segment at large, the Fight for $15 is looking stronger than ever. 

The iconic burger brand recently announced plans to reach an average minimum wage of $15 per hour at all of its corporate-owned restaurants by 2024. Of course, corporate stores represent just five percent of McDonald’s global footprint, but according to CNBC, the move will put pressure on the brand’s franchisees to follow suit. Perhaps surprisingly, many franchisees are supporting the wage hike.

So, will all other QSR brands have to raise wages to compete? The truth is, in light of the ongoing labor shortage, many franchise owners are feeling the pressure to raise wages already, regardless of what their competition is doing. 

CNBC interviewed McDonald’s franchisee Tom Locke about his decision to raise the starting wage at his 45 restaurants.

For Locke, the franchise operator in Ohio, the introduction of higher wages was ultimately a business decision more than a moral one. “I’ll be honest with you,” he said during a recent phone interview. “If there wasn’t a huge shortage of labor, we might not have taken the action.” 

 

At the start of the year, Locke had scaled down his menu choices, helping his margins, but he was still struggling with staffing shortages. Every month around 250 employees would leave and the same number need training. In the restaurant industry, turnover of over 100% is common.

 

But since his pay rise, introduced independently of the McDonald’s announcement the following month, retention levels have shot up.

Read the full report at cnbc.com.