Question for the business wizards

[Dan in MI]

I have asked this of myself and other people and can't say I have received a reasonable answer beyond profit. Does anyone have a factual basis to answer this?

Back in the pre 1970's/80's a gas station employed enough people to pump your gas, check your oil, clean the windshield, etc and all could make a living. Now we have one person behind the glass. Grocery stores had stock people overnight and cashiers at all the registers. Now we check ourselves out and have stock people blocking the aisles during the day. I'm sure we can come up with a list of then vs now scenarios.

I was at a fast food place today. No inside dining. Only two employees running drive through. This is high noon on a Saturday. Right next door another fast food place. This place ALWAYS has 15-20 employees out front. How does one store have a ton of people and another near zero. Pay scale? Appreciation of employees?

Is it purely profit margins? What has changed that what once were decent paying jobs are all gone?

What were the percentages of gross income back then, versus today, in terms of materials, employees, utilities, money flowing uphill? Have those needles moved around dramatically, or are there new things that weren't around back then eating up income?

 

[Jeepnik]

Employee costs rose to a point that that what profit they were making would not enable station owners to keep extra employees. One looks at today's gas prices and thing the station owners are making a ton of money on a gallon. Not so. Government now takes a huge chunk out of that price for taxes and fees (a tax that is renamed because some states have laws regarding taxes). The price of that gallon to the station has increased significantly (again, while oil does cost more, taxes and fees paid by others all along the supply chain have risen). Then there's the on going costs of maintenance of equipment that is significantly more expensive. Now factor in all of the other overhead any business pays (rent/mortgage, utilities, personnel (another cost that has risen), and you guessed it taxes and fees on the business itself.

When I started in the oil industry the refinery I worked at gave employees free gas. Just pull up to the pump, fill it up and write your name and meter totals at start and stop. The only problem was when a spouse occasionally put diesel in a gas vehicle or once I know of put gas in a diesel.

Then the government who had been okay with this since the beginning of time decided they wanted to collect taxes on the fuel. The company just paid it. But once the government was involved they decided that the employees had to be taxed as it was part of their "compensation". This killed it. The accounting nightmare wasn't worth it. But the owners of the company (second generation company owners and third generation oil men) came up with a "work around". They couldn't do anything about the increased income tax but they could deal with the other tax issues. They simply took a look at the average amount of gas folks had been using and gave everyone a raise. On the plus side, the government lost a lot more in taxes than the got back on income taxes.

Bye the way, the feds pulled a cute little trick back then. You see a company like Chevron would own the wells. Then once it was out of the ground they would either truck it or pipeline it in their equipment to a refinery they owned and then it went to stations they owned. The government in their brilliance decided that this was some sort of monopoly thing. Their decision was that a company couldn't own the oil all the way through the supply chain.

Business' like Chevron spun off production, trucking, pipelines, intermediate storage, refining and retail into different "companies" all of course owned by the parent company. But you see now every time the oil changed hands the government taxed it. In addition, each company now had it's own overhead including taxes and fees. But that wasn't the end of the mess.

Now a production company gets the oil out of the ground. They sell it to an intermediary (who actually never takes physical possession of the oil). Of course taxes and fees and overhead occur). They might in turn sell it to another intermediary, who could do the same and so on. Eventually the refiner buys the oil and takes physical possession of it. The government is happy because they get taxes and fees all along the way. But the consumer has to pay out the nose for a gallon of gas that would still cost way under a dollar if the government had just left things alone and raped the goose laying the golden eggs.

 

[Colonialgirl]

Yeah and years ago, Joe blow owned the ABC station (might be a brand name) and burpie smith owned the station across the street; BOTH stations also did oil changes, and light mechanical maintenance. They would have "PRICE WARS" trying to increase business and the consumer made out financially. NOW the stations are pretty much corporate owned (never mind the names like wawa or whatever) and price wars now NEVER occur.
GOvernment and corps say OINK OINK OINK !!! and charge for air pumps for tires.

 

[Jeepnik]

Yeah and years ago, Joe blow owned the ABC station (might be a brand name) and burpie smith owned the station across the street; BOTH stations also did oil changes, and light mechanical maintenance. They would have "PRICE WARS" trying to increase business and the consumer made out financially. NOW the stations are pretty much corporate owned (never mind the names like wawa or whatever) and price wars now NEVER occur.
GOvernment and corps say OINK OINK OINK !!! and charge for air pumps for tires.

Peed off a station owner who wanted to charge a young lady for air. I pulled out my air hose and used my onboard air for my ARB's to pump up her tires. It was hard to understand his accent, but it seemed he wanted me to do off his property.

 

[Dan in MI]

So it appears the gov't snout is the major reason for fuel. What about all the other places where service has dropped, and prices risen? is it more gov't interference, profits, new expenses, or?

 

[Jeepnik]

If it's a small business they are likely trying to stay in business with the increases in overhead, including taxes and fees.

Remember too, government has made mandated changes to fuel blends.

 

[rugerguy]

main reason is back in the day, they were called "service stations" that is NOT the case today, but self serve quick stops,,,,,and then there is the 'rate of pay' for a high school or work permit youth , versus a guy making a living to support a family ( minimum wage, entry level comes to mind).........sadly the cashiers of yesterday were a decent paying job , and the lanes with registers sit EMPTY, and the folks cannot wait and want to check out themselves , maybe even try to "beat the system":unsure::rolleyes::cool:

 

[contender]

Another thing many consumers don't understand is the cost of any business that has employees. The term used in business is "Labor burden." If a business hires a person,, then has to pay all the required things such as insurance, unemployment insurance, wages, training, any benefits or incentives to get good help or keep good employees,, it costs the owner more. In general,, Labor Burden is an additional 50% of the wage offered in the beginning.

Now add in that even a totally unskilled HS kid feels it's either beneath them to actually work,, or do manual labor,, and expects a lot more than minimum wage, they refuse to work. Or if they get a job,, they are all too often just a warm body, doing the bare minimum to get by,, and then feel they are under-appreciated.

But if a company offers a good wage,, benefits,, and screens it's applicants,, along with a pre-set job description AND expectations,, they often get the people actually willing to work. Then they can offer top quality customer service,, and by keeping good employees,, they can absorb the Labor Burden easier,, because in the long run good employees cost them less. But the owner has to WANT to have that kind of business.

Corporations that worry about the bottom line & stockholders more than actual service & quality,, will slowly deteriorate.

 

[Jeepnik]

I kind of lumped that all into overhead, but your explanation is spot on.

 

[Lt92]

Another thing many consumers don't understand is the cost of any business that has employees. The term used in business is "Labor burden." If a business hires a person,, then has to pay all the required things such as insurance, unemployment insurance, wages, training, any benefits or incentives to get good help or keep good employees,, it costs the owner more. In general,, Labor Burden is an additional 50% of the wage offered in the beginning.

Now add in that even a totally unskilled HS kid feels it's either beneath them to actually work,, or do manual labor,, and expects a lot more than minimum wage, they refuse to work. Or if they get a job,, they are all too often just a warm body, doing the bare minimum to get by,, and then feel they are under-appreciated.

But if a company offers a good wage,, benefits,, and screens it's applicants,, along with a pre-set job description AND expectations,, they often get the people actually willing to work. Then they can offer top quality customer service,, and by keeping good employees,, they can absorb the Labor Burden easier,, because in the long run good employees cost them less. But the owner has to WANT to have that kind of business.

Corporations that worry about the bottom line & stockholders more than actual service & quality,, will slowly deteriorate.

Exactly this...I've made kind of a study about your observations on my area; we have 7 top-name fast-food joints...only 2 are worth a darn;
1. Chik fil A
2. Wendy's
In all the others, the employees are surly, unkempt, tatted/pierced, and completely disinterested.
And this shows in sales...1 & 2 are jammed all the time...friendly, helpful, and keep the premisis clean. I really believe the other places are simply write-offs to launder money...yet I struggle to understand this given the high cost of a top-tier franchise...how can the franchisee visit his/her place at lunch with 5 people inside and 3 in the drive through with a line across the street so long at Chik fil A that local police frequently have to direct traffic during lunch?
It's not rocket science...all these places are pulling from the same labor pool...I put it down to poor management...unless, like I opened, perhaps they don't Want to be successful