Could a minimum wage hike actually help these fast-food stocks?


By Ben Levine for Kapitall.

Amidst growing media attention devoted to the ever-widening income gap in the United States, some of those left behind have decided to take a stand. 

Hundreds of fast-food workers from across the country assembled in a Chicago suburb over the weekend to advocate for a minimum wage hike . For some strange reason, people get upset when they don't get paid enough to live .

According to Glassdoor , a site compiling reviews and information about the nation's larger employers, average wages for some of the biggest fast-food chains break down in the following way: Subway pays around $7.90 per hour, McDonald's ( MCD ) and Taco Bell ( YUM ) each pay around $7.80, and Burger King ( BKW ) and Wendy's ( WEN ) each pay around $7.70 for entry-level employees. 

The movement of employees that gathered in Illinois over the weekend suggests something a bit more livable: $15 an hour.

While there is naturally quite a bit of criticism  for such a bold number, and for the idea that people should be able to earn enough to house, feed and clothe their families, there appears to be a case for a minimum wage increase outside of simple decency. 

Apparel retailer  Gap  ( GPS ) announced plans earlier this year to increase their minimum wage from $9 to $10, and claims to have since seen a 10% increase in applicants . This, in turn, gives them a wider pool from which to choose better employees. What's more, a recent study shows that of the 13 states that raised their minimum wages in 2014, all 13 saw stronger employment growth  than the other 37. 

While too great of a hike could hurt fast-food companies' bottom lines, it seems that a reasonable hike could have unforeseen effects that may just help the economy and, potentially, the companies that fought hard and early for reasonable wages.

Do you think minimum wage increases could help fast food in the long run, or could they hurt their profits? Use the tools below to begin your analysis, and let us know what you think in the comments. 

Click on the interactive chart to view data over time. 

1. Burger King Worldwide, Inc. ( BKW , Earnings , Analysts , Financials ): Burger King Worldwide, Inc., together with its subsidiaries, operates and franchises fast food hamburger restaurants under the Burger King brand name. Market cap at $9.31B, most recent closing price at $26.50.

2. McDonald's Corp. ( MCD , Earnings , Analysts , Financials ): Operates as a foodservice retailer worldwide. Market cap at $96.43B, most recent closing price at $96.50.

3. The Wendy's Company ( WEN , Earnings , Analysts , Financials ): Operates as a quick-service hamburger company in the United States. Market cap at $3.92B, most recent closing price at $9.99.

4. Yum Brands Inc. ( YUM , Earnings , Analysts , Financials ): Operates quick service restaurants in the United States and internationally. It operates in six segments: YUM Restaurants China, YUM Restaurants International, Taco Bell U.S., KFC U.S., Pizza Hut U.S., and YUM Restaurants India. Market cap at $32.7B, most recent closing price at $74.04.

(List compiled by Ben Levine. Analyst ratings sourced from Zacks Investment Research. Employee wage date sourced from Glassdoor. All other data sourced from Finviz.)

Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

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