Here's what fast food will cost with $17 an hour wages

1) Demand for fast food is probably as elastic as demand is for most things. At higher prices, demand will undoubtedly fall off -- squeezing margins and income.
2) You'd expect fast food restaurants, as Ace pointed out, to continue to push the trend of automating, and to the extent they can, do more with less in that environment. The ones that can't do that and be able to maintain any sort of margins, as Dick pointed out, won't be able to stay in business., and the ones that can jump through those hoops due to their scale, obviously will be employing fewer people.
3) Which is why, the truth is that the actual minimum wage is (and will remain for even more people) $0.

 

You'd assume McDonald's sets prices at a spot that maximizes its profits. That is what successful businesses do. So to the extent that there are customers who want what McDonald's offers, McDonald's average price point is at the spot that attracts the optimal volume of customers relative to that average price point. That is how you maximize your profits.

Within that model, for example, it might have a "value" menu where it sells a few items at a loss, knowing that a certain percentage of people it attracts will buy higher margin items once they are in the restaurant.

They spend a lot of time trying to get these things right and they experiment a lot.

Wages are a cost input of running a McDonald's. If you have a law or regulation that mandates higher labor costs for McDonald's, of course it changes that pricing dynamic for its food. Depending on how much more that labor costs, it either makes each McDonald's unprofitable. ... less profitable but still optimally priced. ... or less profitable and less optimally priced.

Ways to try deal with that might be to raise the food prices, try to employ fewer workers, automate or do a combination of all of those things. Those solutions could work, because presumably those higher labor costs would also hit all of McDonald's competitors, too, who will have to react the same way. But the results of that regulation are going to be some combination of: 1) Fewer workers earning more, 2) Some previously employed workers who now earn $0, and 3) Customers paying more for their food -- IF McDonald's can raise prices and still remain profitable.

 

This isn't some bullshit "calculation." Whatever the net impact will be, it will mean some combination of unemployed people who used to have jobs and /or higher prices for consumers.

It's not "whining" when your ability to freely do business is negatively impacted by interference being spurred on by populist BS, anymore than if I reached into your wallet and took enough so that you can't pay your mortgage, you'd be whining.

Secondly, corporate profits are largely stagnant right now -- as much as you want to make mealy generalizations like that to try to avoid addressing specifics. But this isn't about "corporate profits." (which by the way, in the case of McDonald's have been falling off a cliff the past several quarters -- without these laws that increase their costs). It's actually only about certain businesses --fast food restaurants that largely rely on low-skilled workers and pay them what the market dictates for those jobs.

To the extent that includes McDonald's, wages aren't set by some "corporate" entity. They are largely set by franchisees (90 percent of McDonald's are franchised), who can pay only as little as the market allows -- if they pay too little, they can't attract workers. Those franchisees are not running super high margin businesses. And the startup costs and investment was very high, meaning if this puts them out of business they are SOL and have lost millions of dollars. So no, there is no "net positive impact" for those franchisees any more than there will be for the scores of unemployed people this creates.