The owner of a fast food franchise that has been operating for more than 30 years has permanently closed his restaurant.
The McDonald’s branch in Stonestown Galleria, about eight miles south of downtown San Francisco, closed abruptly on Sunday, in what is the latest causality of California’s new $20 an hour minimum wage.
Workers’ wages increased from $16 to $20 an hour on Jan. 1, but the additional expense for owners to pay their workers has hit businesses hard.
Fast food chains across the state have been cutting jobs as a way to cut costs, but franchise owner Scott Rodrick was forced to take drastic action after the owner was unwilling to negotiate a Long-term lease at a “sensitive” price for the location.
Rodrick also explained that property taxes and shared fees for mall tenants were also the most paid for a single location for the business. He had no choice but to close.
Scott Rodrick, the owner of a McDonald’s in San Francisco, will close his restaurant after more than 30 years on Sunday and will partly blame the increase in the minimum wage to $20 an hour.
Rodrick also explained that the mall’s property taxes and shared tenant fees were also the most paid by a single location for the business as a secondary reason for its closure.
“This is a heartbreaking day for my family,” Rodrick told ABC7.
All of Rodrick’s employees have been offered jobs at other nearby McDonald’s and the vast majority of them are able to stay with the company.
“It has been a pleasure for my entire team and I to serve the 19th Avenue and Ingleside neighborhoods for over 30 years,” Rodrick wrote in a note posted on the door at closing.
“All of our valued team members have been offered the opportunity to continue working with my restaurant company or at another nearby McDonald’s,” Rodrick added.
Nearly 10,000 positions at chains from Pizza Hut to Burger King have been cut since the higher minimum wage went into effect April 1, according to a report from a state trade group.
Rodrick posted a heartfelt letter on the franchise’s front door thanking customers for their business.
In some cases, chains have been forced to raise the prices of their menus.
Wendy’s, Burger King, Starbucks and Chipotle have increased the cost of their offerings by up to 8 percent in the Golden State.
On top of that, chains have been closing restaurants, including beloved Mexican chain Rubio’s Coastal Grill, which earlier this month filed for Chapter 11 bankruptcy and closed 48 locations in the state.
Last week, Arby’s Roast Beef, which has been a fixture on Sunset Boulevard in Hollywood for 55 years, closed its doors.
“With inflation, food costs have increased significantly and the $20 an hour minimum wage has been the nail in the coffin,” general manager Gary Husch told the Los Angeles Times.
Arby’s Roast Beef which has been a fixture on Sunset Boulevard in Hollywood for 55 years
The California Business and Industrial Alliance (CABIA) harshly criticized Governor Gavin Newsom for pushing the law, which has also meant that companies in the state have had to raise prices.
To highlight the law’s impact, the trade group even created a newspaper ad featuring mock “obituaries” for popular brands.
Even before the law became official earlier this year, chains like Pizza Hut and Round Table laid off more than thousands of delivery drivers to prepare for the financial ramifications of the change.
The law signed by Newsom in September of last year increases the minimum wage for fast food workers to $20 an hour in chains with more than 60 locations in the United States.
That’s 25 percent more than California’s standard minimum wage of $16 an hour, which went into effect in January.
Nationally, Congress hasn’t touched the minimum wage in decades: It remains $7.25 an hour. Instead, the so-called “wage wars” take place at the state level.
“California businesses have been under attack and outright assault for years,” said CABIA President and Founder Tom Manzo. fox business.
“It’s just another law that puts businesses in greater danger.”
He said officials would be living in a “fantasy land” if they believe drastic wage increases will actually help workers or businesses.
“You can only raise prices to a certain point,” Manzo told the outlet. And you are seeing it. People aren’t going to pay $20 for a Big Mac. It’s not going to happen.’
To highlight the impact of the law, the trade group took out a fake ad in Thursday’s edition of USA Today featuring mock ‘obituaries’ for popular brands.
When the Democratic governor signed the law in 2023, Newsom said the state was “one step closer to fairer wages, safer and healthier working conditions and better training by giving fast food workers a stronger voice and a seat at the table.”
But Republican critics claimed the pay rise would simply mean workers would be replaced by self-checkouts and ‘robot cooks’.
Harsh Ghai, a Burger King franchisee with 140 restaurants on the West Coast, announced in April that he planned to install digital kiosks at all of his locations within two months.
Until the salary increase, he planned to implement them in the next five to ten years.
“Today we have kiosks in probably about 25 percent of our restaurants,” Ghai told Business Insider at the time.
“However, the remaining 75 percent will have kiosks in the next 30 to 60 days.”