The Economics of the Fast Food Industry
Huge Profits and Salaries for the Owners
In order to best maximize their profits, the big fast food giant 's created the franchise system. This system allows the companies to maintain overall control of the product, and give them a guaranteed rate of return, while at the same time allowing local owners to create a low-wage work force best suited to local conditions. For us, as workers, that means our immediate employers are often small business owners, and franchise owners who plead poverty when we demand higher wages.
At present 2,708 of Pizza Hut’s 4,496 stores are franchises. The rest are run directly by corporate headquarters. In Western Washington the franchise for Pizza Hut has been given to Emerald City.
Pizza Hut is the world’s largest pizza chain, with over 7,500 stores in the US alone. The parent company, Yum! Brands Inc, (previously called Tricon Global Restaurants) also owns A&W, Kentucky Fried Chicken, Long John Silvers, and Taco Bell. According to a company press release, it is: “the world’s largest restaurant company in terms of units with approximately 33,000 restaurants in more than 100 countries and territories.”
In 2003 Yum! Brands Inc’s gross earnings on US operations were $5.6 billion dollars, and its US profits were $812 million. In the first 6 months of 2004 they opened 537 new stores.
The CEO of Yum! Brands Inc. is David C. Novak. In 2002, he earned a salary of $996,154. But that was not all. He also earned in that year: a bonus of $2,625,000, other compensation of $427,500, and received stock options worth $4,029,534. That’s a total of over $8 million for one year’s work.
If that money were used to increase the current wages of the roughly one thousand workers employed in the 61 stores in western Washington, it would be enough to pay them $15.16 an hour, 20 hours a week, for a full year! If the company’s $812 million in profits were redirected in a similar way, the same would hold true for over 100,000 workers.
In order to best maximize their profits, the big fast food giant 's created the franchise system. This system allows the companies to maintain overall control of the product, and give them a guaranteed rate of return, while at the same time allowing local owners to create a low-wage work force best suited to local conditions. For us, as workers, that means our immediate employers are often small business owners, and franchise owners who plead poverty when we demand higher wages.
At present 2,708 of Pizza Hut’s 4,496 stores are franchises. The rest are run directly by corporate headquarters. In Western Washington the franchise for Pizza Hut has been given to Emerald City.
Pizza Hut is the world’s largest pizza chain, with over 7,500 stores in the US alone. The parent company, Yum! Brands Inc, (previously called Tricon Global Restaurants) also owns A&W, Kentucky Fried Chicken, Long John Silvers, and Taco Bell. According to a company press release, it is: “the world’s largest restaurant company in terms of units with approximately 33,000 restaurants in more than 100 countries and territories.”
In 2003 Yum! Brands Inc’s gross earnings on US operations were $5.6 billion dollars, and its US profits were $812 million. In the first 6 months of 2004 they opened 537 new stores.
The CEO of Yum! Brands Inc. is David C. Novak. In 2002, he earned a salary of $996,154. But that was not all. He also earned in that year: a bonus of $2,625,000, other compensation of $427,500, and received stock options worth $4,029,534. That’s a total of over $8 million for one year’s work.
If that money were used to increase the current wages of the roughly one thousand workers employed in the 61 stores in western Washington, it would be enough to pay them $15.16 an hour, 20 hours a week, for a full year! If the company’s $812 million in profits were redirected in a similar way, the same would hold true for over 100,000 workers.