Wendy’s and Jersey Mike’s franchise owners in California have cut hours and staff to offset higher labor costs caused by the state’s new $20 minimum wage.
Lawrence Chen, who owns seven Wendy’s franchises with his family in Southern California, said he has not only cut his hours but also helped fill shifts at his burger joints.
“I would schedule one less person to come in and then come in and work the hours that weren’t on the schedule,” Chen told The Associated Press.
At a Wendy’s in Fountain Valley, Orange County, the chain had about a dozen workers on the afternoon shift before the state raised the minimum wage from $16 to $20, but has now cut that to seven.
Chen said he is also limiting overtime pay but has no plans to lay off any of his 250 employees.
That’s not the case for Juan Carlos Chacon, owner of nine Jersey Mike’s stores in Los Angeles. A minimum wage increase that took effect in April forced Chacon to cut his 20-person part-time staff to 145 from 165 and cut hours.
He was also forced to raise prices on menu items, a move that was also made by many rival fast-food restaurants including McDonald’s, Wendy’s, Burger King and In-N-Out.
“I’ve been in the industry for 25 years, working with two different brands, and I’ve never seen a price increase as big as what we did in April,” Chacon told The Associated Press.
Chen raised prices at Wendy’s restaurants by about 8% in January, anticipating higher labor costs due to a law signed by California Gov. Gavin Newsom.
“When labor costs skyrocket by more than 25 percent overnight, the already thin-margin restaurant industry will be forced to cut other expenses,” said Giotto Condie, president and CEO of the California Restaurant Association, which opposes the bill.
“They don’t have many options other than to raise prices, cut opening hours or reduce staff numbers.”
As The Washington Post previously reported, the new law has forced dozens of popular chain restaurants in the state to close, including Rubio’s California Grill, citing rising labor costs.
Newsom has argued the wage increase is necessary to pay California’s more than 500,000 fast food workers a living wage.
Fast-food restaurants in the state added 8,000 jobs in the first two months after the law took effect, compared with the same period in 2023, according to the U.S. Bureau of Labor Statistics.
June figures have not yet been released.
“Several franchisees have already noted that higher wages have attracted more qualified applicants and reduced turnover,” said Joseph Bryant, vice president of the Service Employees International Union.
With post wire
