A new survey found that 74% of fast food restaurant owners in California “are increasingly likely to close a restaurant, a thought that’s becoming more likely as restaurant closures continue,” according to the Daily Mail.
“According to a recent report from Business Insider, this is already happening, with foot traffic to fast food restaurants in California dropping significantly.”
This is a devastating blow to the middle class. As Forbes magazine explains, owning a fast-food franchise is one way to build wealth.
…Business owners and investors build wealth by using labor and leverage. They’re not just working to pay the bills or for their next paycheck. They’re earning profits that, ideally, can be used to build more wealth. The difference is, they’re not working to help someone else achieve their goal of accumulating wealth, they’re working toward their own goal.
Governor Gavin Newsom has never acknowledged responsibility for the three years of COVID-19 lockdowns that have crushed California businesses, or for the radical progressive policies that are behind California’s ridiculously high cost of living (policies that the Governor not only supports but signs into law every year).
And Newsom fails to acknowledge that his $20 hourly minimum wage at fast food restaurants has only created permanent poverty in a state once known as the land of opportunity. Is this his end goal?
Instead of acknowledging that “those who stay employed will get higher wages, but those who don’t” will be left with fewer jobs, Newsom would make fast-food owners’ lives even harder. And he’s already done so.
This is a fact well documented by the late economist Milton Friedman.
Instead, the Governor sent his subordinates to harass media outlets, including the Globe, that accurately reported on fast food job losses and store closures. The harassment and demands for retractions and “corrections” on social media and in emails continues.
I received an email from Brandon Richards, Deputy Director of Communications for Governor Gavin Newsom’s Office, requesting a retraction or correction. He claims that employment has increased in the state since the minimum wage for fast food restaurants was raised to $20 per hour. (More details here)
A recent survey of 200 fast-food companies found that less than a year after the bill was passed, 89 percent of restaurants surveyed had already had to reduce staff’s regular working hours, according to the Daily Mail.
This finding is consistent with the situation of college students returning home for the summer who, despite having paid work throughout their high school years (except during Governor Newsom’s COVID-19 lockdowns), are reporting difficulty finding summer work, especially in fast food restaurants.
“California fast food restaurants are being forced to cut staff hours, close restaurants or even consider moving out of state altogether because of Governor Gavin Newsom’s new $20 an hour minimum wage law, a new study has found,” reported the Daily Mail.
As the Globe reports, some fast-food restaurants have had to lay off employees entirely.
Some locations have closed entirely, but the most notable changes have been the massive layoffs: More than 1,200 Pizza Hut drivers have already been laid off, with services like DoorDash and Uber Eats set to replace them in the coming months. Many other chains are now considering similar measures for deliveries.
In June, the Globe reported:
Rubio’s Coastal Grill, a Carlsbad-based Mexican restaurant chain with more than 200 locations nationwide, announced over the weekend that it would close 48 locations in California due to rising costs, including employee wages. A total of 48 “underperforming” locations will close across the state, Rubio’s said. Half of the closures will be in the Los Angeles area, 11 in Northern California and the rest in the San Diego area.
“The rising cost of doing business and the current business environment in California are the primary drivers of the closures,” Rubio’s said in a statement. “The decision to close a store is never made easy. While painful, these store closures are a necessary step in our strategic, long-term plan to position Rubio’s for success for many years to come.”
A study by the Employment Policy Institute documented the dire response from fast-food restaurant owners in California.
98% say a $20 minimum wage law would apply to limited-service restaurants, and 41% say a minimum wage law would result in a loss of $100,000 to $200,000 per restaurant.
moreover:
98% of California fast food restaurants said they increased menu prices, 89% cut employee hours, 73% limited employee shifts or overtime, and 70% reduced staff or consolidated positions.
These are labor decisions that employers must make to stay solvent in hard economic times.
Fast-food restaurant owners in California said the workforce changes will affect their decisions about whether to stay in business.
Fast-food restaurant owners said legislation raising the minimum wage to $20 would affect the total number of employees at their restaurants.
75% say their workforce will decrease. 50% say their workforce will decrease somewhat. 25% say their workforce will decrease significantly.
Newsom’s response to the new $20 minimum wage law for the fast food industry was the “clean-up” bill, Assembly Bill 610, which was supposed to… well… clean up the mess made by Assembly Bill 1228. At least, that’s what we should think. But Assembly Bill 610 created new problems and added a host of new exemptions.
In late February, the Globe reported that Governor Newsom had arranged an exemption for a longtime high school friend and donor, the billionaire owner of Panera Bread, ahead of the cleanup bill. The exemption concerns Panera Bread’s business model, which means that businesses that operate bakeries and sell bread as a standalone menu item after September 2023 are exempt from AB 1228. Greg Flynn owns more than 20 Panera Bread stores in California. In addition to being a high school friend, Flynn has been found to have donated at least $164,800 to Newsom’s political campaigns.
The Globe and other outlets received a cheeky email from Alex Stack, Newsom’s deputy communications director, calling all media coverage of preferential treatment for a former Newsom donor and longtime friend “absurd” and claiming that “Panera is not immune from the law either.”
The cleanup bill’s language states that fast food restaurants located on public lands, including airports, hotels, event centers, theme parks, museums, gambling establishments, corporate campus cafeterias, and ports, piers, beaches and park concessions, will not only be exempt from the $20 hourly minimum wage that will start in April 2024, but they will also be exempt from regulation by Governor Newsom’s ominous new Fast Food Council, which the Globe reported is an expansion of government and control.
There is a solution: If you run a Taco Bell on Main Street, you don’t get an exemption. But if you run a Taco Bell at Sacramento International Airport, your employees apparently don’t need to make the fast-food restaurant minimum wage of $20 an hour.
As if that weren’t enough, Forbes reports, “California officials are reportedly considering further increases to the recently implemented $20 minimum wage for fast-food workers. According to Restaurant Business, the California Food Council, founded by Governor Gavin Newsom, plans to propose another 3.5% pay increase for 2025 at a meeting scheduled for late July.”
If Gavin Newsom isn’t trying to destroy California, then he’s more incompetent than we thought. But if he’s destroying the state at the behest of evil special interests, then he’s just a useful fool. Either way, he’s killing middle-class businesses in California. By design?
