Hacker News Reader

Comment by pydry | Hacker News Reader

That's a fair point, but also remember the franchisees also make a profit (an average of $1.8 million per restaurant apparently), which is not counted in the above figures either. McDonalds also have a lot of non franchised restaurants, which complicates the calculations because it's hard to see who is taking profits and where.

I'll try recalculating for Starbucks, since not having franchisees makes the calculations easier:

Starbucks in 2019:

* Made $26.5 billion dollars

* Employed 346,000

* Average barista wage ~$12 / hour = ~$25,000 per year

* Average profit per employee = $76,589

View on HN

> Starbucks in 2019: Made $26.5 billion dollars

Hold on a minute, that's Starbucks' revenue, not profit. You haven't accounted for any non-labour expense.

From its financial data (https://finance.yahoo.com/quote/SBUX/financials?p=SBUX) (Yahoo link for convenience), that $26.5b revenue is directly offset by $19b in cost-of-goods-sold (including some salaries already paid). Other overhead and depreciation accounts for another $3.5bn, and interest expenses contribute $235m.

The net pre-tax profit for Starbucks is $3.9bn, and if that were distributed equally among all employees (from your figure) it would result in about $11,200/worker over and above their existing salary.

That's closer to the break-even-wage-rate that Starbucks could conceivably offer, if it's intended to have zero return on capital (about $19bn in current assets for FY2019). And that figure is volatile; if you repeat for this fiscal year you'd calculate about $3200/worker.

It's net revenue, not "revenue", and that accounts for salaries. Arguably depreciation ought to be included in that number, but not capital investment.

When Amazon made zero gross profit for a decade (or was it two?) it wasn't because they weren't making profits.

> It's net revenue, not "revenue",

Check the financial statements again. The $26.5b figure you cite is gross revenue, of which $24.4b is operating revenue. From that revenue you deduct the $19b cost of goods sold (including salaries) to find $7.5b of operating profit, and from that you deduct depreciation and administration expenses.

New investment does not show up as an expense on a financial statement, since it builds capital -- at the accounting level it's a transformation of one asset (cash) to another (land/equipment/etc).

$26.5 billion dollars in revenue, not profit. 2019 was a particularly good year with $3.599B in net profit. That is $10K per employee. 2020 was worse with $0.928B in net profit: $2.7K for each employee. There really isn't much wiggle-room for significantly higher salaries. And during good years, Starbucks tend to hire more employees rather than increasing salaries (employee count went from 277k in 2017 to 346k in 2019).

That’s $26 billion in revenue: profit was $4 billion. Note also that half of their stores are “licensed”. The difference between that and franchised is unclear to me at present.

Reply on news.ycombinator.com