Back in 1996, the manager of the Kenny Rogers Roasters in Schaumburg, Il. had pointed to two employees who were – for lack of a more polite term – “slacking off” and asked me if I could believe that he was paying them ten dollars an hour. In the nineties, businesses in this northwest suburb of Chicago were having a difficult time finding people who were willing to work for minimum wage, since the pool of potential employees for entry-level jobs in the area was shallow. In an effort to attract potential employees, some businesses arranged to transport those who were willing to travel from the southern suburbs and/or pay much more than minimum, such as the ten dollars offered by this Kenny Rogers outlet.
Within a few years following this conversation, the Kenny Rogers Roasters chain has, sadly, all but disappeared.
The downfall and demise of restaurants – both chains and independent operations is business as usual in a free market. Carroll’s Hamburgers, Wimpy, Howard Johnson, Victoria Station, and most recently, Bennigan’s are restaurant chains that had reached impressive levels of success, only to contract and either disappear, become a part of other chains, such as Burger King, or survive today with as few as one or two stores.
The experience and knowledge, or lack thereof, that is exercised by business founders, owners and operators is what usually dictates how businesses operate in a free market.
The free market could be described as being an artificial person: it grows with the addition or expansion of businesses. Problems within the economy, an industry, or even a specific business could cause it to “catch a cold.” However, in a worst-case scenario, it could die due to neglect, such as mass-ignorance regarding how businesses operate, or interference, such as third-party involvement, over-regulation on the part of one or more government entities or a government takeover of the free market, such as in socialist and communist countries.
Using the artificial person example, the recent walkouts that had occurred within the restaurant industry are the symptoms of a serious problem.
Mismanagement, such as failing to change to remain competitive, changing only for the sake of change, and even corrupt or incompetent executives could destroy a company. Unfortunately, those who want the creation of a “living wage” may have begun a bottom-up or middle-out destruction of the entry-level job, and the opportunities, such as establishing a work ethic, gaining basic business experience and attention to detail, or even saving money for school that are inherent in those jobs.
Although I had never worked for McDonald’s, I had heard and read that “the Clown” is willing to help its employees better themselves by teaching the basics in business and promoting them – if they have the work ethic.
How many employees of fast-food restaurants who believe that they are entitled to a massive pay raise have asked their employers about promotion opportunities? How many have tried to open restaurants? Yes, the failure rate is high, but someone had to open the first Chick-fil-A, Wendy’s, Burger King and, here in Chicago, the first Portillo’s – and it wasn’t the government or community organizers who built those businesses.
In the seventies, a friend of mine had opened a hot dog stand in Chicago. He said that the money was good, but long hours were necessary in order to make a restaurant work.
Of course, it is very easy for someone to suggest that those striking, entry-level fast-food workers utilize their experience and start their own businesses – the hard part is to overcome today’s bureaucratic maze of over-regulation. Unfortunately, reaching this unenviable point depends upon the now seemingly-impossible task of finding a willing source of funding.
It seems ironic that the usual cast of politicians and activists who demand that private businesses practically double the wages paid to their employees, also support a system that has made the process of starting and operating a business much more difficult – especially for those who want to better themselves, such as people who work at fast-food restaurants.
When the pro-business types complain about over-regulation, the pro-government folks cry “so, you want to get rid of health and safety laws.” Believe me, nobody wants to eat at a dirty restaurant; the fear of illnesses, death, lawsuits, and in the case of the most respectable entrepreneurs, the loss of a good reputation and a good name, encourage the upkeep of their operations.
Health and safety standards are necessary – the regulations that have no positive impact on a business are the ones that could define the success or failure of a company.
One of my previous jobs was delivering auto parts to local body shops. One of the auto body shops that I had delivered parts to was literally a spotless operation – both in the customer and work areas. This was at a time when most body shops had cluttered customer waiting areas with filthy, disgusting coffee makers, and work areas that were engulfed in a urethane cloud.
After selling the body shop, one of the owners opened a restaurant. Based on how he kept his body shop so clean, this was the only restaurant that I had no doubts about eating in. In the nineties, he had spent a great deal of money remodeling his restaurant in order to comply with an upcoming indoor smoking law, which required separate smoking and non-smoking areas. Unfortunately, the indoor smoking law changed, and all indoor smoking became illegal, making many of his modifications a waste of money. The money lost to this quickly-changed law, in addition to a wave of new competition, left him unable to compete.
Yes, I miss eating at Kenny Rogers, as well as Bogie’s, the restaurant that lost money – and the ability to adjust to a changing business climate in the name of over-regulation. Unfortunately, those who demand that restaurants adopt an unsustainable business model – one that spends more than it generates — may be the beginning of the end of a new generation of lost or diminished restaurant chains.