Los Angeles, California – Fast food chains in California are feeling the effects of a recent minimum wage hike, leading to layoffs and closures across the state. Since the law came into effect on April 1, nearly 10,000 jobs have been cut at chains like Pizza Hut and Burger King. Additionally, popular Mexican chain Rubio’s Coastal Grill filed for Chapter 11 bankruptcy and closed 48 locations within the state.
The California Business and Industrial Alliance (CABIA) criticized Governor Gavin Newsom for pushing through the wage increase, which has forced businesses to raise prices in addition to cutting jobs. To illustrate the impact of the law, the trade group placed an advertisement in USA Today featuring mock ‘obituaries’ of well-known brands like McDonald’s, Subway, and Burger King.
In response to the wage hike, businesses have resorted to tactics such as raising prices, reducing store hours, and implementing digital ordering kiosks to offset labor costs. Critics of the law argue that it will lead to workers being replaced by automation, such as self-checkouts and ‘robot cooks.’ Burger King franchisee Harsh Ghai announced plans to install digital kiosks in all of his 140 restaurants on the West Coast, expediting the process due to the wage increase.
The law signed by Newsom in 2023 aims to increase the minimum wage for fast-food workers to $20 an hour at chains with more than 60 locations in the US, a significant increase from the standard minimum wage of $16 an hour in California. While proponents view the law as a step towards fairer wages and better working conditions, opponents argue that it poses a threat to businesses and could lead to further job losses.
Business owners like Tom Manzo, president of CABIA, believe that the wage hike puts California businesses in jeopardy and have expressed concerns about the sustainability of such drastic increases. As the state grapples with the repercussions of the new law, the future of the fast-food industry in California remains uncertain. The debate surrounding minimum wage increases continues, with differing opinions on the potential impacts on workers and businesses.