TGI Friday’s operates around 80 restaurants in the U.K. but it has a problem. The British restaurant market has never been more competitive, but too many TGI Friday chefs and support staff are leaving for new jobs with higher pay.
In response, the company is now allocating 40 percent of each server’s check to the backroom staff. While that’s a high percentage, British servers are paid the minimum wage of $10.56 an hour before their tips. (This isn’t like the U.S. where tips define earnings.) The move makes sense — it’s either that or raise prices on consumers and lose business.
Of course, economically incontinent as they always are, the unions see it differently.
Unite, the union that represents TGI Friday’s serving staff, suggests that this is about “greedy owners” and their immoral desire to have lower wage individuals subsidize them. It’s typical British union bull excrement. The reality here — both financial and moral — is that TGI Friday’s cannot offer midrange restaurant food at low prices without retaining more staff at current costs. The costs of recruiting and training new staff are significant.
But the moral concern is most important here.
Because where Unite says that TGI Friday’s leadership team are punishing low-wage earners, I would say that TGI Friday’s are trying to maximize the great moral balance of capitalism: the provision of a good product at good prices to the maximum possible number of people. The simple truth is that if TGI Friday’s cannot spread their earnings across their staff in the way they are doing, they will have to raise prices on consumers.
And what does that mean? Well, if prices go up just 5 percent, then a four person low-income family who has saved up for a special night out will have to pay around $10 to $20 more for their meal. That lost money is no longer available for other pursuits of happiness or the payment of bills.
Conclusion: The unions talk a big game, but when it comes to the crunch, they are enemies of economic reality and moral beneficence.
