Trump's Department of Labor proposes rule that lets employers steal employees' tips

[anothernewbbaccount]

No, I did not (and so no I cannot) and, further, cannot see why you’d conclude that. And a business model is a model deployed by a business. The fact that many restaurant businesses operate with this model and are successfully still in business (and presumably making money), with apparently little difficulty in attracting enough staff who will (however reluctantly, perhaps through lack of choice elsewhere) work for minimum or lower wages, reliant on tips to make enough to live on, proves it is a viable business model for the business owner.
And will likely, sadly, remain so in our fucked-up economy (economic model?), as long as people are still, by circumstance ‘forced’ to work for such wages/tips.

What it is absolutely not, as agreed elsewhere by clear implication, is a viable '“model for making a decent living as an employee” - which nobody ever said it was, least of all me. I specifically said I agreed it was not right, as others also pointed out. Like others, I’d far rather see people paid a decent wage and not be reliant on tips. I’d prefer to patronise places that operate such a model (and being in Europe, I have a greater chance of being able to do so, than appears to be the case in the US, from what I have seen written elsewhere).

I believe you agree with others above who have noted it is far from ideal for the workers, and, yet again, I say I also agree with them (and you) re this. I’m not sure why you want to continue to make an argument with me when it seems we probably agree. I certainly do not understand why you criticise me when I have used clear language to describe an unfortunate situation, that I do not approve of, but which is clearly the reality we live in: the business model is viable otherwise there would not be businesses operating this model.

When or if restaurants cannot find staff to work for minimum or lower wages, hoping to make enough to live on via tipping, perhaps the business model will cease to be viable and some restaurants will go out of business, or adopt a different business model by deciding to pay decent wages and persuade customers that slightly higher prices are valid and still good value. But it seems, anecdotally, that at least some of those who tried this different model, did not yet succeed.

I don’t know what else to say to explain this to you, and I don’t understand why you take issue with me on this. I doubt you are being wilfully perverse merely to pick a fight, but at this point, seeing as I do not know how much clearer I can be, I’ve explained it as much as I plan to. Hopefully you now understand what I am saying.
Again, good day.

ETA TL:DR is it possible that you do not understand what a business model is, or that you mean something different to generally accepted usage when you use the term?

[anon89609066]

@Derrick_Brundage

The idea that the owners are all profiting off of labor is misguided, generally. Confirmation bias leads people to see bad actors and apply that as the general case.

That’s not “confirmation bias.” Let me ask you, what are the major components of restaurant overhead?

[Derrick_Brundage]

@anon89609066

That’s not “confirmation bias.” Let me ask you, what are the major components of restaurant overhead?

It depends on circumstances, but labor is typically the highest expense. For the reasons why the owner has little room for paying higher wages, see my earlier posts.

[anon89609066]

@fitzador

I wonder if this is because, in order to scale, chain restaurants need massive suppliers that can supply food at cheap prices. This inevitably leads to restaurants providing the same lackluster stuff that comes from Sysco, and thus the only way to vary what’s essentially the same product is the theme of the restaurant.

I believe the answer is more complicated. The USA is served internally by a large mass distribution network mainly of trucks on highways and commodities over rail, some shipping on barges in the big rivers.

Europe is on a more local scale. Not entirely, just more. There is trucking, for sure, and they have bananas from South America just like we do. But for lots of things, local economies have supported local growers and local distribution. Local fisheries. Local farms. Local bakeries.

They also raise money centrally by significantly higher VAT and other taxes, compared to the USA, to support all those local ideas.

Chain restaurants here are designed to operate at scale. Any franchise is an artwork of scale: supply chain management, and personnel management to maintain consistency of product and message.

I know that many chains struggle, as Derrick_Brundage said. I believe they struggle mainly because there is so much competition, not because there is an inherent problem with big chains. Many big chains run like clockwork and do very well for themselves:

The 20 best chain restaurants in America

In-N-Out Burger is ALWAYS PACKED. They are doing great, about 800 million in sales, growing about 5% every year and they keep opening new stores. I don’t know their over/under, since they are privately held, but my guess is they are profiting fine. Why don’t they carve off, say, 50 million of that and give every one of their 16,000 employees a $3000 raise? They were voted by Forbes as one of the top 100 employers in the USA. In-N-Out Burger | Company Overview & News

So, what gives?

Again, define success. In the USA profit=success. The way to profit is reduce overhead, increase sales. How do you reduce overhead? In general: reduce the cost of facilities, supplies and operations. If you cannot change the cost of rent and you only have so much control over how much meat, bread and animal sauce cost, then that leaves… your labor force. You keep wages as low as you can get away with.

Or you give it away to the employees because you’re a nice person and get laughed out of your IPO.

That’s why we need strong labor laws. Stronger than what we have now.

[Derrick_Brundage]

@anon89609066

Again, define success. In the USA profit=success. The way to profit is reduce overhead, increase sales. How do you reduce overhead? In general: reduce the cost of facilities, supplies and operations. If you cannot change the cost of rent and you only have so much control over how much meat, bread and animal sauce cost, then that leaves… your labor force. You keep wages as low as you can get away with.

This is a MacGuffin. Sure, there are business that fall prey to the misguided thinking of “reduce overhead, increase sales” and eventually put themselves out of business in the process. Because you can only reduce overhead and increase sales so far before you kill the goose laying the eggs.

What’s missing in your analysis is:

1. An acknowledgment that there is a finite amount of “profit” that can be made from any restaurant, since it’s throughput is inherently limited and competition is fierce.

2. That the vast amount of capital required to establish a restaurant represents value that MUST pay a reasonable return, else it gets invested elsewhere and the restaurant–and the jobs it creates–never exist.

[anon89609066]

@Derrick_Brundage

you can only reduce overhead and increase sales so far before you kill the goose laying the eggs.

What does this even mean? It is vague. What I am saying is the practice of reducing overhead is current practice. Nobody is in the business of increasing overhead for the sake of increasing overhead.

There’s no MacGuffin. We are talking about business practices. If the goal is to be successful and the definition of success is ever-increasing profit, as it is in the USA, then certain things have to happen. Those two things are mainly controlling costs and increasing sales. What else is there, towards the end of that definition of success?

Profit is over/under. We can slice and dice that as much as you want, but it will still always boil down to bringing in more money than what goes out.

The thing that is missing is I have only hinted at what the definition of success is in other places like Europe. Perhaps their definition of success is a steady state, not an expansive one. Perhaps their success is the ability to pass down their restaurant business to a son or daughter, and they’ve worked their entire lives to make it worth the son or daughter’s while to do it. Perhaps their success is simply to be an asset to the local community.

Lots of other possibilities arise.

But only one definition of success is 800 million in annual sales and 16,000 employees as the ultimate goal, as it seems to be in the USA, …mainly denoted by the fact that most of the restaurants here are chains and most of the restaurants there are not. Different people, different goals.

Built into the Europeans’ system is a way to value employees and concepts other than, or in addition to, profit.

How do we have that? We don’t, unless it is artificially imposed.

[Derrick_Brundage]

@anon89609066

Profit is over/under. We can slice and dice that as much as you want, but it will still always boil down to bringing in more money than what goes out.

NO. That’s what you’re missing. These projects are funded with an amortization that spans DECADES. People don’t sink millions of dollars into a restaurant and then define profit by “more coming in than going out.”. In that situation profited is defined as “returning enough on my investment to justify the enormous risk”.

[anon89609066]

There is no fundamental difference in the math, friend. The only way to make a profit is not to spend more than you make.

[Derrick_Brundage]

@anon89609066

There is no fundamental difference in the math, friend. The only way to make a profit is not to spend more than you make.

Perhaps we’re in agreement then. My point is that in most restaurants there isn’t a vast pool of money available to be redistributed for higher wages, and the ire directed at supposedly-greedy owners is misplaced.

We can name a few likely exceptions, but they’re not representative of the industry.

[anon89609066]

My whole point is that it’s a cultural difference in values. In other parts of the world, a typical restaurant’s finances are structured so that labor takes more. We don’t do that. Owners have other priorities. We have lower quality ingredients, more expensive menu items, better distribution channels, and yet our labor force takes home far less. It doesn’t take a PhD in economics to figure out what is going on.

[Derrick_Brundage]

Mostly agree, though your view is more bleak than mine. I don’t see a sinister undercurrent of profiteering at the expense of labor, and the industry does appear to be swinging towards higher-quality and better labor policies. I think the market reflects American values of the past, and has a long lead time before changes in the culture are reflected in the market.

[anotherone]

@Derrick_Brundage

. People have no idea how little money there is, yet somehow everyone already “knows” that restaurants are a risky business.

If you can’t run a restaurant without treating people as sub-human food delivery systems who don’t deserve a living wage, then perhaps you should not be in the restaurant business.

@Derrick_Brundage

I explained in an earlier post why this is magical fairy thinking.

Your explanation rings of profiteering off the labor of those who have no other choices available to them. Do you think anyone grows up dreaming about being a food server? No, they do that work when it is the only thing left available to them. They do it out of desperation and there you are ready to take advantage of them by pretending that it’s ok to keep your employees in poverty and living paycheck to paycheck all the while hand-waving away any notion that you are a bad person by insisting that this is simply the way it works as if you had no choice in the matter.

@Derrick_Brundage

The idea that the owners are all profiting off of labor is misguided, generally.

Ok then tell me, where does your profit come from? Fairies? Unicorns?

@Derrick_Brundage

I guess you’re not interested in finding common cause, so: part of the problem.

Why would anyone want to find common cause with a person who thinks some people don’t deserve a living wage based on their age?

@Derrick_Brundage

For the reasons why the owner has little room for paying higher wages, see my earlier posts.

Raise your prices. The economics isn’t complicated.

@Derrick_Brundage

My point is that in most restaurants there isn’t a vast pool of money available to be redistributed for higher wages

So you charge for your food at a rate which allows your employees to be treated fairly. How is it you want to be a restraunture but you don’t seem to think of that option but instead insist on doubling down on the “oh poor me” tactic of pretending you have to have some pool of money?

@Derrick_Brundage

I don’t see a sinister undercurrent of profiteering at the expense of labor,

Of course you don’t. That’s why you are here defending profiteering at the expense of labor. You don’t think it’s immoral or wrong to pay slave wages to people in 2017 as long as you do it while serving food. You think that’s normal and the way things should be.

“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” - Upton Sinclair