What It’s All About
So. I have a couple of questions I thought I would ask to see if anyone knew the answers.
The first one is about tobacco: What other crops could one grow in the same climate and soil as tobacco?
The second one was raised by an article in “The Oregonian.” The minimum wage went up to $6.00 an hour in January. In the article about the effect on businesses, one restaurant owner claimed that he would have to pay an additional $8,000 a year in wages, and in order to be able to pay for the additional expense, he would have to bring in an additional $24,000. I don’t get it. Assuming (and maybe this assumption is false) that no other expenditures increase and that he was only breaking even – not making a profit, why would he have to bring in three times as much as he spends? I understand that he would have to pay for the additional food that it would take to raise the $8,000, but is it really true that he has such a low profit margin that he needs three times the amount of money he spends to break even?
I understand that I am operating from the “false” assumption that breaking even is okay. As we all know, making a profit is the only way for a business to survive – if you just make enough to cover your expenses (including personal), or are marginally profitable, than you have failed in our economy. I was just hoping that maybe someone could explain this situation better to me.
By the way, one owner of a restaurant claimed that restaurants typically have between a 2% and 5% profit margin on their food items. If I am doing the math correctly, that means that for every $100, the typical restaurant makes between $2 and $5. That seems awfully low unless they are including operating costs.
The first one is about tobacco: What other crops could one grow in the same climate and soil as tobacco?
The second one was raised by an article in “The Oregonian.” The minimum wage went up to $6.00 an hour in January. In the article about the effect on businesses, one restaurant owner claimed that he would have to pay an additional $8,000 a year in wages, and in order to be able to pay for the additional expense, he would have to bring in an additional $24,000. I don’t get it. Assuming (and maybe this assumption is false) that no other expenditures increase and that he was only breaking even – not making a profit, why would he have to bring in three times as much as he spends? I understand that he would have to pay for the additional food that it would take to raise the $8,000, but is it really true that he has such a low profit margin that he needs three times the amount of money he spends to break even?
I understand that I am operating from the “false” assumption that breaking even is okay. As we all know, making a profit is the only way for a business to survive – if you just make enough to cover your expenses (including personal), or are marginally profitable, than you have failed in our economy. I was just hoping that maybe someone could explain this situation better to me.
By the way, one owner of a restaurant claimed that restaurants typically have between a 2% and 5% profit margin on their food items. If I am doing the math correctly, that means that for every $100, the typical restaurant makes between $2 and $5. That seems awfully low unless they are including operating costs.