Celebrity chef Andrew Gruel discusses the rising cost of doing business in California as a beloved fast food chain is forced to close 48 locations across the state.
Fast-food jobs have grown in California since the state implemented an industry-wide $20 minimum wage, despite claims by trade groups that say the increase has hurt franchisees and their workers.
California’s fast-food industry added 10,000 jobs from March to May, according to the U.S. Bureau of Labor Statistics. The new salary came into effect on April 1.
In March, the month before the new wage, the state had 735,000 fast-food workers. Since January, nearly 21,000 fast-food jobs were added in California, according to BLS data.
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Gavin Newsom’s $20 minimum wage is causing “businesses to collapse,” some fast-food owners say. Newsom’s office cites the addition of fast-food jobs in the two months since the wage hike began. (Getty Images/Fox News Digital/Photo Illustration/Fox News)
“The California spirit means working hard and being rewarded with a living wage,” said California Governor Gavin Newsom. “All of our progress in higher wages and better benefits for working people – it’s not just about the hourly wage rate. It’s about building a dignified and respectful future where everyone is involved in our growth. We are a state that pays quick attention- Food workers – who are mostly women – work two and a half jobs to make ends meet”.
Newsom went on to say “the right wants to take away protections for working families, we built this economy by valuing the dignity of work, valuing family time and honoring unions. You don’t have to be a CEO to live a decent life – and in California, you don’t have to be.”
Figures compiled from the BLS contrast claims by the California Business and Industry Alliance (CABIA), which said earlier this month that 10,000 fast-food jobs had been lost. CABIA said the wage increase was responsible for businesses needing to cut labor costs to survive.
Jonathan Maze, editor-in-chief of Restaurant Business, is tight-lipped about the ramifications California’s minimum wage hike has had on fast-food establishments in the Golden State.
The rule affects restaurants that have at least 60 locations nationwide, in addition to those that make and sell their own bread.
“If I were Gov; Newsom, I wouldn’t be proud of the lowest year-over-year fast food employment growth we’ve seen in years,” CABIA President and Founder Tom Manzo told FOX Business. “With the exception of the pandemic, growth has not been this low since the Great Recession.”
Manzo said the governor was eager to highlight “a month or two of data that tells a positive story, but the bigger picture is still overwhelmingly negative. He owes it to fast-food businesses like the owner of McDonald’s in San Francisco who just closed. an apology.”
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To highlight what it says are the unintended consequences of the new minimum wage law, CABIA has taken out an ad in Thursday’s nationwide edition of USA Today mocking “obituaries” of popular fast food brands. (‘Fox & Friends’ script / Fox News)
Scott Rodrick, owner of McDonald’s at Stonestown Galleria, just southwest of San Francisco, announced that their last day of business was June 23 in a typed note posted on the restaurant’s door.
“Economic headwinds aren’t just affecting fast-food franchises, large and small. Most restaurants are facing unprecedented challenges — fine dining, casual dining, independent or a brand franchise like me — this critical sector of California is struggling,” Rodrick said.
In its most recent annual report, Newport Beach-based Chipotle Mexican Grill reported spending $2.9 billion on food, beverage and packaging last year, up from $2.6 billion in 2022. Labor costs in 2023 were $2.4 billion , but fell to 24.7% of revenue from 25.5% in 2022, the Los Angeles Times reported.
On June 3, Rubio’s Coastal Grill said it had closed 48 of its California restaurants, about a third of its 134 locations. The chain attributed the closings to the rising cost of doing business in California, according to the Times.
In September 2023, Newsom defended the wage increase when he signed the measure into law. He called it a step closer to fairer wages and safer and healthier working conditions.
California restaurant owner Scott Rodrick discusses the impact of inflation, labor costs and other challenges for the fast food industry on “Maria Bartiromo’s Wall Street.”
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“Because of the leadership of the California Legislature, these hardworking workers finally got the raises and job security they deserved. And the companies themselves had a more stable workforce,” he said.