10,000 Jobs Lost as California Fast Food Chains Struggle with $20 Minimum Wage

According to a big trade association, fast food franchises in California have been forced to hike prices and cut labor costs in order to survive after the state’s new $20 minimum wage. As a result, approximately 10,000 jobs have been lost.

One popular taco restaurant in the state had to close 48 locations last week due to the rule, which went into effect on April 1. The California Business and Industrial Alliance (CABIA) criticized Democratic Gov. Gavin Newsom for enacting the bill.

To quote CABIA founder and president Tom Manzo, “California businesses have been under total assault and total assault for years” in an interview with Fox Business.

To compensate for the increased pay, numerous large businesses raised prices. This included fast food giants like McDonald’s and Burger King as well as budget favorites like In-N-Out Burger.

As a result, many have reduced staff hours, and others have even accelerated the transition to automation.

Officials are living in a “fantasyland” if they believe that massive wage hikes will benefit workers or businesses, according to Manzo, who claims that fast food chains have lost over 10,000 jobs since Newsom signed California Assembly Bill 1287 into law last year.

Prices can only go up to a certain point, he stated. And now you’re witnessing it. Twenty dollars for a Big Mac is ridiculous. I don’t think it will happen.

Mock “obituaries” of well-known fast food chains were featured in a full-page advertisement that CABIA purchased in Thursday’s USA Today.

The first big chain to close as a result of the new law was Rubio’s California Grill, which was famous for its fish tacos. By the end of May, 48 out of approximately 134 locations had gone. The company’s headquarters are in San Diego, and they said that the “rising cost of doing business” was the reason behind the layoffs. On Wednesday, the chain was insolvent as per The Post.

The franchise owner of a Fosters Freeze fast food joint near Fresno recently shut down the business, citing financial difficulties as the reason for the closure. The shop had previously offered its employees higher wages.

Restaurants serving fast food, which have been hit hard by continuously rising inflation, increased prices either before or just after the new rule took effect.

According to a recent research from Kalinowski Equity Research, Taco Bell increased menu prices by 3% while Starbucks in California increased the price of beverages by 50 cents after April 1.

Business Insider reported in January that Marcus Walberg, whose family owns four Fatburger shops in Los Angeles, intended to increase menu pricing by 8 to 10 percent in reaction to the new rule.
According to information provided by Gordon Haskett, the price of Chick-fil-A increased by 10.6% from the middle of February to the middle of April.

The skyrocketing prices of fast food have led 78% of consumers to view it as a “luxury” purchase, according to a recent survey by LendingTree.

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