Mill Valley, CA: Workers at In-N-Out location behind counter take orders. (Photo: David Tran Photo, Shutterstock)
Gov. Gavin Newsom’s $20 Per Hour Fast-Food Minimum Wage Tanking the Industry
‘Some have had to lay off staff completely – a prospect many had warned about when Newsom signed the bill into law
By Katy Grimes, July 29, 2024 2:55 am
A new survey reports 74% of California fast-food restaurant owners said “there is an increase in the likelihood of shutting their restaurants down – an increasingly real concept as restaurants continue to shutter,” the Daily Mail reports.
“Recent reporting from Business Insider showed how this is already happening, with customer foot traffic around California’s fast food restaurants considerably down.”
This is devastating to the middle class. Owning franchise fast-food restaurants is one way to build wealth as Forbes explains:
…being a business owner or investor, uses labor and leverage to build wealth. You aren’t just working to pay the bills and get to the next paycheck; you’re ideally earning a profit that can be used to build more wealth. The difference is that you aren’t working to help someone else achieve their goal of accumulating wealth; you are working toward your own goal.
Never once has Gov. Gavin Newsom accepted responsibility for killing off California’s businesses with his 3-years of Covid lockdowns, nor with his radical progressive policies behind California’s ridiculously high cost of living – policies he not only supports but signs into law every year.
Nor does Newsom acknowledge that in California – once known as the land of opportunity – his $20 per hour fast food minimum wage only serves to create a permanent poverty class. Is this his end goal?
Instead of acknowledging that “the ones who remain employed will receive higher wage rates, but fewer will be employed,” Newsom will cause owners of fast food businesses more hardship. And he already has.
This is a well-proven in fact by late economist Milton Friedman.
Instead, the governor sent his office minions to harass media outlets including the Globe, who accurately reported on the fast food job losses and business closures. The harassment and demands for retractions and “corrections” continues on social media and in emails.
We received an email from Brandon Richards (He/Him), Deputy Director of Communications in the Office of Governor Gavin Newsom, asking for a retraction or correction and claiming the state has gained jobs since the $20 per hour fast food minimum wage. (read about it here)
Now we have another recent survey of 200 fast-food companies which found that 89 percent of those eateries polled have already been forced to reduce scheduled hours for their employees, less than a year since it was passed, the Daily Mail reported.
This survey comports with college students home for the summer – kids who were gainfully employed throughout high school (except during Newsom’s Covid lockdowns) – who report they can’t find summer jobs, and especially in fast food.
“California fast-food restaurants have been forced to cut back on employee hours, shut down, or consider moving out of state completely because of Gov. Gavin Newsom‘s new $20-an-hour minimum wage law, a new study has shown,” the Daily Mail said.
Some fast-food restaurants have had to lay off staff completely, as the Globe has reported:
Some stores outright closed. Most notable, however, has been the massive amount of layoffs. Already, over 1,200 Pizza Hut drivers have had announced lay-offs, with drivers to be replaced by services such as DoorDash and Uber Eats in the coming months. Many other chains are currently also looking into doing the same for deliveries.
Rubio’s Coastal Grill, a Carlsbad-based Mexican food restaurant chain with over 200 stores nationwide, announced that 48 stores in California would close over the weekend because of a large number of rising costs, including employee wages. According to Rubio’s, a total of 48 “underperforming” stores will be closing throughout the state. Half of the closures are to be in the Los Angeles area, with 11 closing in Northern California and the rest in the San Diego area.
“The rising cost of doing business and the current business climate in California are key factors in the closures,” Rubio’s said in a statement. “Making the decision to close a store is never an easy one. While painful, the store closures are a necessary step in our strategic long-term plan to position Rubio’s for success for years to come.”
The Employment Policies Institute survey reported some devastating responses by the California fast-food restaurant owners:
- 98% say the $20 minimum wage law applies to their limited-service restaurant.
- 41% say the minimum wage law will cost their restaurants $100,000-$200,000 per restaurant.
Additionally:
- 98% California fast-food restaurants said they raised menu prices.
- 89% reduced employee hours.
- 73% limited employee shifts or overtime.
- 70% reduced staff or consolidated positions.
These are the labor decisions employers must make to remain solvent in bad economic times.
California fast-food restaurant owners said these labor moves will also be in play for future decisions to remain in business.
The fast-food restaurant owners said the $20 minimum wage law will impact the overall number of employees at the restaurants:
- 75% say the number of employees will decrease.
- 50% say the number of employees will somewhat decrease.
- 25% will significantly decrease.
Newsom’s answer to the fast food new $20 minimum wage law was a “cleanup” bill, Assembly Bill 610, which was supposed to… well… clean up the mess made by Assembly Bill 1228. At least that is what we are supposed to think. But AB 610 opened a new can of worms, adding many new exemptions.
In late February, the Globe reported that Gov. Newsom facilitated one exemption ahead of the cleanup bill for a longtime friend from high school, donor and the billionaire who owns Panera Bread. The exemption was written to the Panera Bread business model: A business operating a bakery and selling bread as a standalone menu item since September 2023, was exempted from AB 1228. Greg Flynn owns more than two dozen Panera Bread locations in California. And in addition of being a high school chum, Flynn contributed at least $164,800 to Newsom’s political campaigns, we learned.
The Globe and other news outlets received a cheeky email from Newsom’s Deputy Communications Director Alex Stack insisting that all of the media which reported on the preferential treatment of a Newsom donor and old friend was “absurd,” and that “it appears Panera is not exempt from the law.”
The cleanup bill language says it exempts fast food restaurants in airports, hotels, event centers, theme parks, museums, gambling establishments, corporate campus cafeterias, and Publicly owned lands including ports, piers, beaches and parks concessions – not just from the $20 an hour minimum wage which started April 2024, but also from regulation by Gov. Newsom’s creepy new Fast Food Council, which the Globe has reported on as government expansion and control.
Now there’s a solution. So if you own a Taco Bell on Main Street, you don’t get the exemption. But if you own a Taco Bell at the Sacramento International Airport, your employees apparently don’t need the $20 per hour fast-food minimum wage?
As if that isn’t damaging enough, Forbes reports, “California officials are reportedly considering a further increase to the recently implemented $20 minimum wage for fast-food workers. The California Food Council, which was established by Governor Gavin Newsom, is planning to propose an additional 3.5% raise for 2025 at their upcoming meeting in late July, according to Restaurant Business.”
If Gavin Newsom isn’t trying to destroy California, he’s even more incompetent than we thought. But if he is destroying the state on orders from evil special interests, then he’s just a useful idiot – either way, he’s killing off California’s middle class businesses. By design?
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Newsom’s philosophy: cause immediate economic chaos while pretending to “help” the lower classes-then deny, deny, deny….
If you saw the “result” of the Venezuelan “election” where Maduro was improbably and fraudulently re-elected despite losing the vote count you see California politics in the mirror.
let some of these illegals that are pouring into our country by the droves get jobs in these fast food places for say $10 an hour. when you’re illegal you should be tickled to death to be able to even work. much less quibble about a minimum wage law! the government should give these fast food places a pass regarding the wage law, since they would be giving an illegal a job! LOL of course this will never happen, because it makes sense! LOL
That’s not sense, that’s being a retard.
Katy, an internet biography states that “During his teen years, Newsom had to work several jobs to support his family . . .” It would be interesting to learn the facts about that.
Yes, “by design.” We can only conclude, which we actually concluded a long time ago and I contend we knew even before this freak was elected the first time, that Gavin Newsom is trying to take a wrecking ball —- on every possible level —- to the State of California.
Why he would do this —- the opposite of what is right and constructive — we have all endlessly speculated about. Right? He obviously knows better. We all know, and possibly even he knows, that his ruinous efforts will only come back to bite him hard in the end, one way or another, wherever he goes and in whatever enclave he tries to hide himself.
Is it because he was raised in it, schooled in it, paid off by it, ruled by the guy with the horns and the pitchfork, etc.? Who even knows, or cares, at this point. Whatever is the answer, the bottom line is that he is doing it, when he had every opportunity to conduct himself and “lead” California differently. He is obviously programmed to destroy everything he touches.
The Gavin Gruesome & Co. era can’t be over soon enough. And —- heaven help us —- we will eventually recover, even from this onslaught.
Somewhere along the line Newsom made the conscious decision that power and control was his life’s ambition. He could have chosen to use this power and control to do good and build a better society, but instead he has chosen to use this power and control to tear down society and enslave folks. He uses eloquent platitudes like equality, equity and inclusion but those are just buzz words to try to confuse the masses that what he is doing is in everybody’s best interest. The masses now see through his veneer to see the evil in the policies that he champions and want to be set free from them. Some have left the state to find relief and folks like me are still here in California praying and working to make the state a better place to live and raise a family in. We literally are like the Israelites living in bondage in Egypt in the book of Exodus. A famine in their land led them to Egypt and ultimately, they became enslaved by the Egyptians. In Gods timing He led them to the promise land. My prayer is that now is the time that we will be set free of the bondage that we are living in.
Amen to that
We do not know God’s plan but we remain faithful and trust in Him, not earthly rulers like Mr. Newsom.
I should have added as a practical matter that if a wanna-be dictator like Newsom (and his ilk) wants to “kill off” the enemy he has hit the target in going after and attempting to destroy small business. And that’s because —- and obviously I’m not the first to say it or think it, duh — small business and thus the actual middle class are the only truly independent people in the state. That is, they are not dependent on government for whether they succeed or fail, nor for govt handouts. But govt can smother and destroy them through laws and regulations and through this very thing that threatens to kill them now —– imposition of, for instance, a $20 minimum wage for fast food workers.
The In-n-Out Double-Double (Animal Style, of course) costs a dollar less in Oregon.
We’re getting absolutely nothing for that extra dollar that the folks up in Oregon don’t get.
Yes, JD. Lost on almost everyone responsible (Newsom, et. al.) is the fact that the people who got the government-mandated raises now have to spend more of their own money when they go to a restaurant. In other words, they gained nothing and possibly lost their jobs.
I think it is more that paying fast food workers a higher wage. You have to remember that this crowd believes they know what is best for the millions of California residents This is to make people stop going to fast food places and not caring about who’s life they ruin in the process. Let them eat cake!
It’s become obvious to many of us that Democrats and WEF globalist stooges like Gavin Newsom are killing off California’s middle class businesses on purpose? It’s all about control and keeping the masses poor and dependent? They’re truly demonic?
As for Newsom’s spokes-thing Brandon Richards, his harassing emails to Katy Grimes are just as annoying as his profile on X which identifies him being a member of the obnoxious alphabet rainbow mafia:
@Brandon Richards 🐻 Rapid Response for @CAGovernor @GavinNewsom | @GSPMgwu & @Willamette_U
Alum | he/him | 🏳️🌈 bi+ | Personal
Are restaurants that close locations included in the 2% of those that didn’t raise menu prices?
There are several problems with this whole narrative. Starting with the idea the minimum wage of 20 bux is closing restaurants. If you own or operate a restaurant and a cost increases, you adapt. If your 1st plan is to just close, you are an idiot. Considering this wasn’t a SECRET wage change, you had time to implement changes. Not everyone has the “huevos” to run a restaurant and these soft owners should disappear. How does closing a 1 to 2 MILLION dollar operation because of maybe 100k added “cost” make sense? That’s 10%, I get it, but this is using historical numbers, with projections. We are seeing menu item prices go up more than 30%. That menu price increase looks like it covers the 10% using basic math. Back of a napkin math-
100% of sales
30% toward Food costs
30% toward Rent costs
30% toward Labor costs
10% profit, (maybe franchise fees)
Yes, simplified numbers. Calm down.
Now factor in the wage increase from $16 (before) to $20 (after).
That’s a 25% add on to base wage of 30% of sales. A typical ff restaurant will be adding $100k in labor costs with no changes in labor force size or hours for a year. This is bad management on it’s surface, so we will ignore that.
Before sales $1 million
Before labor costs $300 k
After price change sales $1.3 million
After price change labor $400 k
Notice anything?
The thinking here in this article and by many without an understanding of restaurant Financials is that spending 100k while making 200k above that is bad. This is the same stupid belief that hourly employees don’t want to work OT “because they get taxed more.” Don’t misunderstand me, I am not saying the increase was good or bad. In-n-Out has traditionally paid more than everyone else, they managed to make it work. It’s lazy to blame the new $20 minimum wage for the the closing of restaurants.
100% agree…it is much easier to blame government…or people running the state…if they only new what the actual profits of these companies are.. 👍
Completely agree with both above statements.
Clearly you Newsom useful idiot staffers don’t have enough to do. How about getting a job?
One problem with your analysis is that you assumed that demand doesn’t change in response to price increases. Price increases are meant to increase revenue, but that’s not a guarantee since fast food consumers are price-sensitive. A 30% increase in food price might even result in less sales. As we hear in other reporting, people aren’t going out to eat as much as before because of it’s getting too expensive to do so as much as before.
Customers also adapt. Mostly by not paying the higher prices. Try adapting to that.
Yes to your comments. Also, Rubio’s was a case of self-imolation: too much corporate debt and bad re-branding strategies can break any chain and put Rubio’s in a very precarious position so that California’s onerous policies knocked them over. (Covid restrictions and mandated wages as examples, aided and abetted by inflation’s ornery outbursts). Don’t get me wrong, government should never fiddle with the market place and $20/hr fast food minimum wages are outrageous on their face.
” If you own or operate a restaurant and a cost increases, you adapt. If your 1st plan is to just close, you are an idiot”
Most people who say this are idiots themselves who have never owned a restaurant. Of course business owners “adapt”, they adapted to that annual lease increase 5 months ago as stipulated in the lease agreement, they “adapted” to the additional fuel surcharges by their vendors 4 months ago thanks to climate change cultists, they adapted to higher electricity bills 3 months ago thanks to the war on fossil fuels, they “adapted” two months when they saw their phone/internet monthly subscription fees go up again, they “adapted” a month ago when an employee who “voluntarily quit” now is demanding unemployment benefits from a letter they just received from the labor dept. And now this month we have an idiot who thinks this $20/hr increase is just another meaningless adaptation. So now we will have to adapt to increased payroll costs not just on the hourly wage increase, but higher worker’s comp premiums and mandatory employer payroll contributions as well. It’s amazing how we have so many arm-chair Newsom supporters here…
Ah yes, somehow paying low wage workers more is bad for the workers.
Somehow, paying low wage workers more will destroy the middle class.
This article is nothing but oligarchist, late stage capitalism propaganda. Paying the lower class more is bad because what about our money?? How are we supposed to afford our gated communities and private schools? Do they expect us to mingle with the poors?
You’re perpetuating a class divide. Promoting a type of economy that can only exist based on cheap labor from the masses. If your system relies on paying the majority of people below the cost of living, it’s a bad system.
It’s your wealthy leftist Democrat masters like Gavin Newsom who live like royalty in gated estates with 24/7 armed security paid for by taxpayers who are creating the class divide by dictating wages that don’t reflect reality. Most restaurants operate on an average profit margin of 3 to 5 percent which is a very thin margin that leaves little room for error. Many people can no longer afford to eat out anymore and increased wages are part of the reason. Inflation is out of control because of the failed Marxist policies of Biden and your Democrat masters. You obviously have never started or operated a business and no doubt hardworking taxpayers are probably supporting you in some manner?
Gosh. I guess you’ll not be going to the Milton Friedman birthday bash?
Somehow paying low wage workers more means it all makes sense based on business fundamentals?
Somehow arguing against higher wages means pure greed?
Some people will talk anything they want but not really have an idea how difficult or complex the issue is.
But of course if we were a Communist State that decides all the major business decisions many of these same people will be complaining more about the lack of services/products and the lack of jobs.
I don’t even like Newsome but he was right in this case the federal minimum wage has not been raised in 15 years with speculative pricing in real estate and pretty much ever where else workers need 20/ hour as a bare minimum if you can adjust and pass costs on to customers it is a cost of a fare wage for work a cost of business these companies find ways to please stock holders
As was pointed out by TJ, CW, and BG, you Newsom staffers and Friends of Brandon (he/him) have NO CLUE what you are talking about. But trolling articles on the taxpayers dime is part of your job description I guess.
good!, chit food. and why we are an obese nation.
“$20 per hour fast food minimum wage only serves to create a permanent poverty class”
So the logic is that paying employees more creates poverty? No wonder conservatives feel so sorry for the wealthy. We got it all wrong folks! Making more money is what makes you poor.
That made go hmm also! How does paying someone more money increase poverty?? The reason why our parents were able to buy homes and retire comfortably is because unions FORCED companies to pay a decent wage.
Now the Governor enacts similar legislation, and it’s to destroy the state??
So keeping wages at $8 or $9 an hour, that’s how you end poverty?
The logic as they say is not logicing.
they want to destroy us depoplize us lower population we are all gonna be in the soup lines unless we get this idiot out of office vote red..they will stop at nothing to slave us and tame us..this is Hitler shit..but they say trump is…no trump will give us freedom..they want you to work until you die pay them your taxes and more taxes then more taxes then live in poverty and drive fucked up electric cars which burn up…fuck you demonrats
If restaurants have to increase food prices in order to cover increased wages mandated by Gavin Newsom and other wealthy legislative Democrats to levels that consumers can no longer afford (in addition to having to deal with inflation and other increased costs due Bidenomics), then the restaurants will lose business and eventually have to close or go bankrupt. The laid off workers will no longer have incomes which increases poverty. Wealthy Marxist Democrats like you don’t care if restaurants close because you think that hardworking taxpayers will always be there to support you.
Paying more per hour does not automatically result in more take-home pay. If you get paid more per hour but are working fewer hours, are you really getting paid more?
Clearly most of you people that say raising labor rates does not effect the bottom line of a business have never owned a business or have any idea what it takes to stay in business. You act like there aren’t any other factors to take into consideration. Soon the unskilled labor force want raises and demand more benefits , then they quit because of an entitlement mentality. Thinking the government can manage us into profitability is ludicrous. It’s funny how the government makes more in taxes from this move isn’t it? There is only one thing government loves, the almighty tax dollar. If you have never owned a business, don’t comment , you have no idea what you are taking about.
A few comments here also saying that increasing hourly wage means more take-home pay for workers. As if businesses can’t reduce hours or staff in response to the increase, as stated in the article? Maybe, overall, workers get paid a little more since restaurants need to maintain a minimum staffing level to operate. However, those who lost their job are now getting paid $0/hour, and those that kept their job most likely aren’t getting significantly bigger paychecks.
you know the companies could just make a bit less profit or raise prices in a titration system… problem solved.. these companies profit from cheep labor and government ends up subsidizing still with programs
You obviously have never started or operated a restaurant (or any other business for that matter). Most restaurants operate on an average profit margin of 3 to 5 percent which is a very thin margin that leaves little room for error. In order to stay in business to cover increased wages mandated by wealthy Democrats like Gavin Newsom (along with other soaring costs due to failed Democrat policies and Bidenomics), restaurants will have to increase food prices to such high levels that many people will no longer be able to afford and they will stop eating out. Restaurants will lose business and will eventually have to close or go bankrupt. Workers will be laid off and have ZERO income.
such lazy journalism. Min wage increase is minor compared to the decline in customers since COVID, or the exorbitant price hikes in general running costs, by other businesses and the down turn in office occupancy rates. is everyone commenting running to their bosses suggesting the take a pay cut to help increase profits or just pushing to lower someone else’s wages. Good businesses will survive, others will not. that’s the American way.
As was pointed out by TJ, CW, DW, and BG, you Newsom staffers and Friends of Brandon (he/him) have NO CLUE what you are talking about. But following a script handed to you that you don’t even believe and trolling articles on the taxpayers dime is part of your job description I guess
I always see help wanted signs in most of the fast food windows, so this Info can’t be accurate
Fast food restaurants have high employee turnover, so they want a new hire ready to go when someone quits if they’re looking to replace. This doesn’t conflict with fewer hours and employees overall.
sorry but if you cant afford to pay your employees a liveable wage, your business shouldnt exist. 20$ an hour is still barely liveable. People shouldnt be working full time for poverty wages and need 3 side hustles on top of that just to be able to scratch out a living
Maybe we should focus on lowering the cost of living instead? Why can’t we demand policies that lower the cost of living so that the current minimum wage is a “living wage”?
Good article but she lost major points with the personal insults. Readers are here for information, not personal beefs. You don’t like the Governor, great. That’s your choice. Words like ‘loser’ or ‘creepy’ belong in romance, not the business section.
Also if your lack of professionalism leads to misinformation or inaccuracy, it’s not ‘harassment’ to be called out on misrepresentation.
Your dislike of Gavin Newsome is so loud, the facts are being overshadowed
What are you TALKING about? You’re responding to the wrong article, which shows you were just handed a script and told to troll. Pathetic
He had too much Kool-Aid at the orgy last night.
I live in So California, I see signs everywhere from fast food chains that they are hiring. At least in my area.
I feel as if I’m living the 1953 film “Invaders from Mars.” When out and about, I find myself checking the backs of people’s necks, if not obscured by long hair, to see if I can find puncture wounds per the movie. It’s nothing short of amazing how our neighbors keep voting for ineptocracy, idiocy, and Newsom. It’s gotta be mind control. People aren’t THAT stupid, are they?
Are restaurants that close locations included in the 2% of those that didn’t raise menu prices?