California fast-food restaurants are scaling back their staff ahead of a state law that will increase the minimum wage to $20 per hour, as reported by the Wall Street Journal.
Signed by Gov. Gavin Newsom in 2023, the law is set to take effect next month. Restaurant executives are already anticipating significant impacts. Jack Hartung of Chipotle mentioned during a company earnings call in February that the law could result in substantial price hikes for California consumers.
Brian Hom, owner of two Açaí bowl restaurants in the San Francisco Bay Area, revealed to the Wall Street Journal that he plans to operate stores with only two staff members instead of four and intends to raise prices by 10%. He also expressed consideration of relocating his business to another state.
Franchisees for Pizza Hut and Round Table Pizza disclosed plans to eliminate 1,280 delivery drivers, according to the WSJ.
Michael Ojeda, 29, who had worked as a delivery driver for Pizza Hut for nearly a decade, shared his dismay, stating, “Pizza Hut was my career for nearly a decade and with little to no notice it was taken away.” Ojeda mentioned that he had been supporting both his mother and partner with his delivery wages.
Other chains are exploring automation in their operations. El Pollo Loco reportedly informed investors of plans to introduce robots in its salsa making. Jack in the Box, with nearly 1,000 locations in California, is said to be testing fryer robots and automated drink dispensers.
Panera Bread, however, will not be affected due to a provision in the bill exempting restaurants that operate a bakery producing bread for sale on the premises as a stand-alone item.
Greg Flynn, whose Flynn Restaurant Group owns 24 Panera Bread locations across California, could potentially benefit from this provision. Flynn, a frequent donor to Gov. Newsom, clarified in a letter to The National Desk that he did not seek an exemption or special considerations regarding the minimum wage hike and suggested that such a narrow exemption holds little practical value.
