How much could a Big Mac go up in price if wages at McDonald's were to double? Answer: 25%, tops.
I based my calculation on this so-called "common-size" balance sheet for McDonald's owned stores, where all percentages shown are a percentage of total sales:
http://seekingalpha.com/article/905041-mcdonalds-dividend-depends-on-how-well-its-franchisees-do
Notice that payroll and employee benefits amount to only 25% of total sales. All the other company expenses amount to 57% of total revenue, leaving 18% of total sales as net profit. Mathematically, you could think of it as $100 sales - $25 to workers - $34 cost of food - $23 other = $18 profit.
If wages were to double, then it is true that that would represent 50% of total sales, and profit would be wiped out if prices weren't raised. BUT, assuming the people running McDonald's are rational, they would move to raise prices. And the amount they would need prices to restore the original profit amount? Just 25%, assuming they don't lose any customers. Mathematically, you could think of it as $125 sales - $50 to workers - $34 cost of food - $23 other = $18 profit.
So, here's the take home message: Wages could be doubled, and prices raised a small percentage, and the precious profits McDonald's is so afraid of losing would stay at 18%. Worst-case scenario - the extra dollar per burger might cause a small drop in customers, and the profit would be a little lower than before - but it seems highly unlikely that many people would stop going.
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