Is $16 a ridiculous price to pay for a BLT sandwich? In today's crazy market, maybe not. Entrepreneur Brian Will believes it all traces back to the $15 minimum wage craze. Progressives promised that the increase would help people afford the basics of life. But in reality, it has just driven up prices, especially for small businesses. Brian Will joins Glenn to explain how this, plus the effects of the COVID-19 pandemic and other economic issues have driven up the price of everything from rent to insurance. Now, he tells Glenn that his restaurants have to sell 93,000 sandwiches just to break even and he reveals the shockingly small profit that the restaurants make on every $16 BLT.
Below is a rush transcript that may contain errors
GLENN: You've gone into restaurants lately, and you've been shocked at the price of anything. Soups, sandwiches. To steak. Anything.
You can fall into, what's going on, this is a scam!
How can a BLT be 16 bucks?
We wanted to get Brian Will on. He's a serial entrepreneur, two-time Wall Street Journal best-selling author.
Leading consultant in business and sales management. He's founded seven different companies across four distinct industries. He is currently the head of a chain of restaurants.
And they are the Derby Sports Bar. Cantina Loca. The Tavern House in Central City Tavern. You might have one in your town.
He's also in his spare time a member of the city council in the town of Alpharetta, Georgia.
Hope we have time to talk about that a little bit.
But he was just on talking about the price of a BLT on Barney & Company.
And everyone on my staff, Brian, found that fascinating, on how you broke that down. How are you doing, Brian?
BRIAN: I'm good, Glenn. Thanks for having me. This is awesome.
GLENN: So can you break this down, why should we look at the price of $16 for a BLT, and say, okay. I understand it, it's reasonable.
BRIAN: Yeah. This whole conversation, Glenn, started with a friend of mine. Who sent me this text, when he was sitting with my restaurant saying, hey, Brian, I'm sitting here eating your BLT at $16. You know it's only bacon, lettuce, tomato, and bread.
And I said, you know, Dan, let me break this down for you. I want to give you some perspective.
That sandwich might cost $16, but we've got $20,000 of rent in that building.
We've got $6,000 in utility. We have $60,000 of payroll. And then we have our general office expenses, that all have to get paid for out of the gross profit margin in that sandwich.
And so we actually did a breakdown for that, if you would like to hear this little breakdown.
GLENN: I do. I do.
BRIAN: That $16 sandwich has about $5 of actual food costs. Which leaves about $11 of gross profit.
But out of that 11, two dollars of that, goes towards rent and utilities. $2.50 goes towards what we call our fixed operational expenses like the TVs and the music and the mats and the towels and all that stuff.
Labor can make that sandwich, $4.50.
Which only leaves me a profit of $2.
So a 16 dollar sandwich, I have $2 of actual net profit that I get to keep, unless or until something breaks or something goes wrong. That's my gross potential net profit.
GLENN: So how many BLTs do you have to sell to be able to keep your doors open?
BRIAN: Yeah, so I was laughing about that. If you take our $86,000 a month in general expenses, figure in a 30 percent food cost, we have to sell 93,000 sandwiches a year to get to zero.
Every restaurant has a break even point, the break even point in that restaurant is about 1.5 million a year. So if I do 1,499,000 in revenue, I lose a thousand bucks.
Everything above 1.5, we can make a profit margin on. But if you never get to the 1.5, you're just spinning your wheels.
GLENN: So what has changed?
I mean, it's not just the price of food, is it?
BRIAN: No. Food has gone up.
But our biggest increase in expenses has been labor.
If you remember, obviously, when COVID hit. Everybody is getting all these extended unemployment benefits.
When we came out of COVID. And tried to bring people back. They didn't want to go back to work.
So we went to a $15 minimum, and that's for kids coming out of high school. And this was three years ago. That's now jumped up to about 16.50. So I have people, with zero experience, 18 years old. Come to work for me, and we start them out at $33,000.
But for now, 60,000 -- our managers are now 70 to 80,000.
So if you look at my restaurant, three years ago. We were paying 500,000 for labor.
On 2.9 million of revenue. Today, we pay 650,000 for labor.
On 2.5 million of revenue. My revenue is down 350. My labor is up 150.
And that's why we have to keep driving the price of these things up.
Everyone wants to get paid. They want a big salary. They want a living wage. But all that does is drive everything up. At some point, we still have to make a profit.
GLENN: Right. This is what happened in Seattle, except they did it by choice.
When Seattle raised the minimum wage. I don't remember what it was. I think it was 15 or $16 an hour.
All the restaurants said, we can't afford this.
And a lot of them left, closed shop, and left Seattle.
Some of them stayed. And some of them just went out of business because of it.
But that's not the only cost.
You have food going up. You have labor going up. You have rent --
BRIAN: Utilities went up 40 percent.
Just our gas and electric. Right? Our insurance went up 40 percent. Everything is -- I mean, the whole supply chain from us down, everybody's cost goes up in that compound.
GLENN: Wait. Why did insurance go up 40 percent?
BRIAN: Because they can. I mean, I don't -- is that a question?
Because you have no choice, but to buy it. Because if you don't buy it, you can't stay in business.
So it goes up, you know. It's crazy how much costs have gone up.
GLENN: So how do you see us weathering this?
BRIAN: You know, business is interesting. I have a picture in my office of a guy on a tight rope. And he's got that big long bar, right? That goes on both sides.
I always say, we have to balance. Business owners are on this tightrope. You have to balance what you can charge on one end. With what the consumers are willing to pay on the other. So long as you can keep that balance. You can stay on the tightrope and stay in business.
But if you charge too much, they stop coming. You fall off.
If you don't charge enough, you get more business at a loss. You go out of business.
So there's always a balance. And in our case, we made sure we put our locations in, in what we call high traffic areas.
So we're getting organic traffic running around our restaurants. Which helps us drastically. But you look at these small operators, that are out there fighting all these costs. That don't have that organic type of traffic.
And that's why they're going under.
GLENN: I mean, you're a serial entrepreneur.
What do you hear from entrepreneurs, that are just beginning today? I mean, it's -- it's a completely different world. Can you make it?
BRIAN: It is. It's a different world in a lot of ways. And I actually do a lot of sales and management training.
And one of the other things we know. In today's environment. Is there's so much information online. That people can research almost anything before they ever walk in your door.
And they already know what your competition is charging.
They already know what they should be paying. And, so again, you're back to this balance of you either need to create something extremely unique, that will drive people in, and make them want to buy from you, or your chances of success are diminished greatly.
So I call COVID the great washout, Glenn.
All the weak operators in Houston, to be able to make it, because we were in a booming economy.
When COVID hit, it just washed out all those weak operators, and only left the ones that are strong.
Now, you've got people coming in behind us, and trying to come in and undercut. But all they will do is lose all their money, and go out of business, and hurt the rest of us.
It's an interesting time to be in business.
GLENN: But if you were a true entrepreneur, it washed out of a lot of people who were just -- you know, my dad used to have his own bakery. That is hard keeping that afloat.
You know, a one little, one-man shop in whatever you're doing.
And food is the worst at that. It wiped out a lot of people who were just working for themselves.
BRIAN: Yeah. Yeah. Just working for themselves, and only making enough money to live on. And most people got washed out, didn't have any financial security behind them, savings.
You know, they just weren't able to weather that bump, which is one of the things I teach entrepreneurs today.
Is you better have enough security behind you, that if the next COVID comes along or something weird happens, you won't get wiped out, at the drop of a hat.
We make up 150 people a day, in March of 2020. It was -- it was a horrible day.
GLENN: Wow. Your thoughts of what's coming in 2024? Any insight in --
BRIAN: Yeah. I've had this question a good bit. And I have friends in the MNA field. And I see everybody waiting to see what will happen with this election. We just don't know what will happen.
I think if Biden gets elected again. He doesn't have to worry about getting reelected.
So who knows what will happen, you know, with the people pulling the strings up there in Washington, and what they're going to do.
So I think we're at a tenuous time right now, particularly in small business. So we need to be very careful.
And we need to be keeping some powder dry, to keep us safe, just in case something else pops up.
GLENN: If Donald Trump were to be elected, he doesn't go to jail.
And the left doesn't set the country on fire. Better or worse for business?
BRIAN: If he can start taking some of these regulations away. If he can start making it easier for us to get those interest rates back down.
I mean, the other issue we have, and I love this topic. I did a video on it the other day about inflation.
Inflation will affect us forever. Right?
We had a 5 percent. We had an 8 percent.
Even if it's 3 percent, that doesn't mean prices are going down.
That just means they compound.
They're never going back down.
Maybe they won't go up as much, but they're not going back down.
People are very confused on how that works.
But if we can get the economy booming again, where people aren't afraid to spend their money. And they aren't hoarding it, trying to wait to see what will happen. Then people will go out. Have fun. And spend more money. And I think we will be okay. It just takes a little time.
GLENN: Yeah. Brian, thank you very much. I really appreciate it.
BRIAN: Glenn, I thank you for having me.
GLENN: Brian Will.