Is Google Really Spending $60 million on Food Every and Why Google Gives Employees Free Foodposted by MR WAVETHEORY at 10/26/2006 12:56:00 PM
Google Inc. (Nasdaq GOOG) spends millions of dollars on food each year running its kitchen for its employees. Google feeds its employees very well. How much does it spend? And, why does Google feed its employees beyond saving employees time away for lunch?
One word: Taxes. When Google spends money on food, it is a pre-tax expense. That means it is spending money that would reduce its profits and therefore the amount of taxes it would have to pay to Uncle Sam. There is a very good tax argument for giving employees free food.
When Google spends $1 of pre-tax dollars on food, that $1 is actually worth more than $1 to employees. Why? When you spend your money on food, you are spending after-tax dollars.
For every dollar you earn, you only keep $.70 if you are taxed at 30%. That means every after tax dollar you spend is actually worth $1/$.70 = $1.42 pre-tax.
Every dollar of money Google spends on food is actually an additional $1.42 of pre-tax compensation. That is how Google is giving employees free money.
If you are a shareholder, you should be asking: How much are employees getting in terms of food subsidy every year? After all, it's your money. If every meal costs $15 and on average employees get fed 300 days per year, that is an additional $4500 of pre-tax dollars for Google. For the employee, that is actually worth
$4500/.70 = $6428 of additonal pre-tax compensation
So, Google is spending close to $6428 per employee.
As of the end of the quarter September 30, 2006, there were 9378 full-time employees. My estimate is that Google spends $60 million on food every year.
9378 X $6428 = $60,281,784 on food every year
Dam! That's an expensive little kitchen they run!