Globe Investigates Fast Food Franchise Owners’s Difficulties Post $20 Minimum Wage Law

The fast food minimum wage battle has raged on in California all year. To give a quick recap:

Following the signing of AB 1228 in October 2023 by Governor Gavin Newsom, the new $20 minimum wage for fast food employees, a massive jump from the $16 minimum wage, forced multiple companies take extreme measures. Some, like Chipotle and McDonalds, announced already raised prices before the effective wage raise date of April 1st. Others invested in automated kiosks and other automated devices to help reduce the number of employees. Some businesses outright closed.

Most notable, however, has been the massive amount of layoffs. Early, over 1,200 Pizza Hut drivers have had announced lay-offs, to be replaced by services such as DoorDash and Uber Eats in the coming months. Roundtable Pizza has also done the same with many of their delivery drivers, with many other chains also quietly doing the same for deliveries in the following months, as seen by the jump of fast food businesses on food delivery sites.

As the economic effects took a toll before the law was even in place, lawmakers scrambled to mitigate the damage. AB 1228 bill author, Assemblyman Chris Holden (D-Pasadena), created a new bill to grant numerous exemptions in an attempt to lighten the economic blow of AB 1228, but for fast food restaurants in airports, stadiums, casinos, events and corporate campuses. As the Globe noted, AB 610 does anything but cleanup the mess caused by AB 1228. While it was passed, closures still continued, but on the more quiet side. In June, this included the mass closing of Rubio’s restaurants across the state.

And when it comes to total jobs lost, the Governor’s office has been particularly sensitive. In June, the Globe reported that 10,000 fast food jobs had been lost so far as a result of AB 1228. While the information came from Stanford University and was checked out across the board, the Governor’s office attacked it, saying that California actually gained fast food jobs. They have released many press releases in the subsequent months, and Governor Newsom himself has said as recently as this week that there have been gains.  The Globe and numerous other outlets, have proven again and again that the gains just aren’t there and that there have been high numbers of fast food job losses in the state. And it’s getting worse, as fast food worker unions are already trying to get another increase to $20.70 an hour.

On Thursday, the Globe spoke to many fast food managers and franchise owners about what it has been like at the ground floor. And the result? More losses than gains.

“Since the minimum wage, yeah, I had to let go of a bunch of people,” replied Diego, who manages a hamburger fast food restaurant franchise in San Bernardino County. “Which is sad. Just down the road was the first McDonald’s, you know? But the minimum wage was too much. We reached a more equilibrium now. We’re down to one person on register even during busier times, and many duties in the kitchen have been spread to others. If we didn’t have to accept cash, honestly, I would just leave ordering to the touch screen board out there.”

Theresa, a franchise owner of Mexican two fast food restaurants in San Diego, told the Globe something a little different.

Fast food losses in California

“Oh, we have been losing people, but they aren’t getting reported as job losses per say. We have people quit or leave for another position, then we just don’t hire and make do. Only if we have a shift situation with not enough people do we hire. We were lucky as we had to hire several people in early June just as schools let out.

“The minimum wage is breathing down on us though. I read through the Globe earlier, and you had an article on 74% of fast food restaurants thinking of shuttering in the state because of it? I totally believe that, because I am.

“Actually, I’m waiting on for more places to close, and when we start to get around this minimum wage thing, most likely by putting in more automation, we’ll expand out. A lot of vacant restaurants will be available and we can get them for cheap. A lot of other places will do this too. But we need to not have this high minimum wage.”

Firings have also been difficult.

“I mean, who do you let go?,” asked MacKenzie, a manager of a franchised pizza restaurant in San Mateo County, to the Globe. “We have teenagers wanting to work and have their first job. Gen Alpha really does want to work, and if we deny them, man, it will hurt. Or do you fire those in their 20s and 30s working their 2nd or 3rd job to make ends meet? We also have single moms. Then there are older workers who are between jobs and need to carry over. And then there are seniors who don’t have enough to retire and need this job.

“That’s been my dilemma since the beginning of the year. No one wants to lose their job, but these wages are making us come closer and closer to losing money. We’re at that limit. In the end I had to fire the teenagers. Not because they were bad workers, but everyone else worked just as hard and seemed to need the money more. And it killed me to do that. And it looks like I might need to cut a few more. The state is basically making us choose whose lives we want to ruin.

“These are all good people. Parents, grandparents, single people. We have people working towards citizenship. Others are thrilled to have their first job. One girl we hired as a driver actually put her wearing her company shirt and hat on TikTok she was so happy with her first job. And then I had to fire her earlier this year because we were just not doing well. All because of the minimum wage law.

“The Governor can say what he wants to say, but from here, the people having to make decisions, it is bad.”

More on the fast food minimum wage is to come out soon.