Due to a changing wage landscape in the U.S. and Canada, fast-food franchises will be facing some steep financial challenges in the short- and long-term. As of January 1st of this year, 20 states have initiated minimum wage increases, including Maine and Alaska. In the Canadian provinces, there is a similar trend. While some feel the way to mitigate mandatory wage increases is by raising prices, the fast-food industry is a very competitive market and consumers can just choose to go elsewhere. To survive and thrive, restaurants will have to be flexible by leveraging their purchasing power and adapt new technologies quickly in order to cut their hidden costs.
- Very visibly, this year, starting in January, in the U.S., twenty states have instituted minimum wage increases, as have already numerous Canadian provinces.
- Old and new franchises are going to have to cope in a business world where the financial markets are showing volatility such as has not been witnessed since the last big recession in 2008,
- Many franchises are concerned, because it’s clear that the cost of the new wage hikes will not be successfully offset by price increases.
“The wage landscape is changing in both the U.S. and Canada and with more quick-service restaurants estimated to enter the market in 2018, franchisees will face new challenges that is going to make 2018 and beyond extremely competitive.”