Fast food chains in California are cutting jobs as a way to cut costs after the state’s minimum wage was raised to $20 an hour.
Nearly 10,000 positions at chains from Pizza Hut to Burger King have been cut since the law took effect April 1, according to a report from a state trade group.
On top of that, chains have been closing restaurants, including beloved Mexican chain Rubio’s Coastal Grill, which this week filed for Chapter 11 bankruptcy and closed 48 locations in the state.
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 created an ad in Thursday’s edition of USA Today featuring mock “obituaries” for popular brands.
California Governor Gavin Newsom signs the fast food bill surrounded by workers at SEIU Local 721 in Los Angeles on September 28, 2023.
The ironic PropagandaTitled ‘In Memoriam: Victims of Newsom’s Minimum Wage,’ it highlighted the problems faced by smaller brands, including Rubio’s, and fast food giants, including Pizza Hut, Burger King, Subway and McDonald’s.
Features news clips documenting changes made by companies in response to wage increases.
This includes raising prices, laying off workers to reduce labor costs, and in some cases closing locations.
One reads: “A McDonald’s franchisee who owns 18 outposts in California is considering reducing hours, raising menu prices and delaying renovations to offset the impact of the state’s $20-an-hour minimum wage for restaurant workers. fast food”.
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.
Rubio’s Coastal Grill announced it would close 48 restaurants in the state this week (Pictured: The grand opening of the third Rubio’s in the Pacific Beach neighborhood of San Diego, California in 1986)
Critics warned that companies would turn to digital ordering kiosks as a way to reduce staff wage costs.
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.”
