When California’s minimum wage increase went into effect in April, fast food workers across the state went from making $16 to $20 overnight.
Lawrence Cheng, whose family owns seven Wendy's locations south of Los Angeles, works in the kitchen at his Wendy's restaurant in Fountain Valley, Calif., June 20, 2024. Cheng used to have nearly a dozen employees at his Fountain Valley location during the day. Now, he only schedules seven for each shift as he scrambles to absorb a dramatic jump in labor costs after a new California law boosted the hourly wage for fast food workers on April 1 from $16 to $20 an hour.
Cheng hopes the summer when business is traditionally brisk with students out of school and families traveling or spending more time eating out will bring a better profit that can cover the added costs. But many major fast food chain operators say they are cutting hours and raising prices to stay in business.
Since their core business is lunch, Chacon has been reducing staffing in the mornings and evenings. He’s also cut a few part-time employees, going from 165 total to about 145. “When labor costs jump more than 25% overnight, any restaurant business with already-thin margins will be forced to reduce expenses elsewhere,” Condie said. “They don’t have a lot of options beyond increasing prices, reducing hours of operation, or scaling back the size of their workforce.”
“Today was payday and I bought $500 worth of stock,” said Lewis. He’s also helping his ex-wife fix the brakes on her car.
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