Minimum wage increase now putting restaurants in predicament of forcing costs to be passed on to consumer.
Fast-food workers in the state of California are being laid off as companies prepare to comply with the state’s imminent $20 minimum wage requirement.
California’s FAST Act (Fast Food Accountability and Standards Recovery Act) was signed into law by Newsom last September, and goes into effect April 1.
According to Business Insider, several pizza restaurants including Pizza Hut and its franchisees Southern California Pizza Company and PacPizza plan to lay off up to 1,200 delivery drivers in order to make ends meet.
Another California pizzeria, Round Table Pizza, said they would also have to eliminate delivery drivers due to Gov. Gavin Newsom’s (D-Calif.) new law, claiming there’d be a “transfer of jobs” to third-party delivery services.
“That said, delivery service fees may increase, and the customer will most likely see even higher prices as a result of this ongoing shift,” reads a statement from Round Table Pizza. “This is the reality of today’s restaurants.”
Indeed, the minimum wage increase is now putting restaurants in the predicament of forcing costs to be passed on to the consumer, however, that may not necessarily work, as one McDonald’s franchise owner noted.
“I can’t charge $20 for Happy Meals,” Scott Rodrick, who owns 18 McDonald’s restaurants in Northern California, told the Wall Street Journal, adding he’s “leaving no stones unturned” when it comes to cost-saving.
Brian Hom, the owner of the Vitality Bowls company, said he’s had to cut staff down to two people from the typical four employees, resulting in longer wait times for customers, adding he’s also increased prices by 10%.
“I’m definitely not going to hire anymore,” Homs told the Journal.
Alexander Johnson, who opened Scooter’s Coffee shop in Nevada, said he was thinking of opening a store in San Francisco, but that due to the minimum wage law the prospect is no longer under consideration.
“It pains me to think about shutting down stores or laying people off,” Johnson told the Journal. “I love California, and I’m very sad about what’s going on.”
Despite the upcoming wage increase, some workers say it won’t be enough.
“When you’re in a tough financial situation, even though it’s not enough to be comfortable, it does help,” said 25-year-old McDonald’s cashier Jaylene Loubet, who lives with her parents, adding, “Food is going up as well, rent is going up as well, bills are going up as well. Even with the $20, money is still going to be tight.”
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