Timothy Bass’ Post

California fast-food workers cooking Big Macs or whipping Frappuccinos will start making a minimum wage of $20 an hour on Monday. For many, this means a 25% raise. The new state minimum uniquely focuses on a particular segment, fast food, affecting some of the country's biggest chains, including McDonald's, Starbucks, Subway and Pizza Hut. It's a big win for cooks, cashiers and other fast-food workers – some of the lowest-paid jobs in the U.S. – whose wages have been growing at a faster clip since the pandemic, after decades of stagnation. California is one of the country's most expensive states; about half a million people are estimated to work in fast food here, mostly women, immigrants and people of color. Many live below the poverty line. The dramatic pay raise has also touched off a heated debate about the impact on local businesses. Smaller franchise restaurant owners warn they'll have to raise prices, reduce worker's hours, cut jobs or even close shop. California's pay hike is a result of a contentious deal struck by labor leaders, including the large Service Employees International Union, and fast-food companies last year.  The new wage law applies to fast-food chains with at least 60 locations nationwide, with exemptions for some bakeries and smaller fast-food outposts inside grocery stores, airports and other venues. Several fast-food executives have suggested prices would go up 2.5% to 3.5% to offset higher wages; Jack in the Box, Starbucks, McDonald's and Chipotle have all warned of upcoming price hikes. That's on top of price increases many restaurants have been rolling out for months. The cost of eating out has stubbornly inched higher even as inflation has cooled elsewhere. Other chains plan to speed up their use of automation, including kiosks and robots. A major Pizza Hut franchisee cited the wage hike as the reason for layoffs of more than 1,000 delivery drivers this year, in a switch to apps like Uber Eats and DoorDash that pushes more delivery fees onto shoppers.

Given the recent increase in minimum wage for fast-food workers in California, it's evident that businesses, especially in the restaurant industry, are facing heightened pressure on cost control. Procurement, in particular, emerges as a critical battleground. Balancing quality with affordability while navigating supply chain disruptions poses significant challenges. Strategic procurement practices coupled with innovative solutions will be key in effectively managing these challenges and ensuring long-term sustainability. 🌟 Here's what you need to know: 🔹 Fast-food workers in California, at chains with more than 60 national locations, now earn $20 per hour, exceeding the state's minimum wage of $16 per hour. 🔹 The state law, passed in September, not only sets this new pay standard but also establishes a council to oversee future wage adjustments and labor conditions in the industry. 🔹 With over half a million fast-food workers impacted, the effects of this wage increase are profound, reshaping the landscape of the restaurant business. 💼 What does this mean for businesses beyond fast-food chains? 🔸 Some chains have responded by adjusting their workforce and menu prices, a move likely to be echoed by others facing the burden of higher labor costs. 🔸 Matthew Haller, CEO of the International Franchise Association, highlights the challenges faced by small businesses, emphasizing the potential for increased prices and reduced job opportunities. 🔸 While the law directly impacts fast-food establishments, its indirect effects are far-reaching, extending to various industries competing for the same talent pool. https://lnkd.in/eKWbvTYj #CostControl #ProcurementChallenges #procurement #agrifood #foodservice Mintec Alex Garber Tom Picha Dayre Lashnits Nick Athanis

The Unintended Consequences Of California’s $20 Minimum Wage For Fast-Food Workers By Jack Kelly 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. California’s minimum-wage law, which went into effect in April 2024, currently requires that fast-food restaurants with 60 or more locations nationwide increase their workers' pay to $20 an hour, which is $4 higher than the state’s minimum wage. Additionally, it installed the Council, composed of industry representatives and restaurant workers, who are authorized to boost the wage annually by up to 3.5%, based on inflation. The Council also advises on health and safety standards for fast-food workers and combats issues like wage theft. Although the bump in pay is intended to help improve the standard of living for more than half a million fast-food workers, there may be unintended consequences that could do more harm to these employees, including restaurant closures, job cuts, reduced hours and increased deployment of automation to bring down expenses.

Next week is a big one for economic data, but there is this as well: "California’s controversial $20 minimum wage for quick-service restaurant workers employed by companies with 60 or more locations is set to finally go into effect on Mon. April 1" How are California restaurants preparing for this? "juggling some combination of multiple solutions, including raising menu prices, freezing hiring, shortening operational hours, and implementing AI solutions." To say this will be interesting will be an understatement, especially if the above efforts still lead to operating losses. "During its Q3 earnings call, Yum Brands said of its California-based Habit Burger Grill, that the company is anticipating a $10 million operating loss impact from AB 1228." #fastfood #wages #inflation #AI Karen McDermott Jack Truong

California’s new fast food minimum wage legislation is set to drive higher menu prices and could have a ripple effect on sit down restaurant brands. Owner/operators of major franchised brands operating in the golden state have already announced major staff layoffs due to the new legislation and the push for automation beyond the current menu kiosks is also expected. There’s been a major push towards automation in the hospitality industry with automated systems like TendedBar and Picnic (two brands I advise) making big strides in sports & entertainment venues, universities, hospitals and airports as the shortage of and high cost of labor continues to present major headwinds for operators. #hospitality #sports #entertainment https://lnkd.in/g-kPZjPt

Navigating the Maze: California’s New Fast-food Wage-setting Procedure 🍔🍟 Seeing the dark clouds of confusion swirling around California's new wage-setting system for fast-food restaurants? 🌩️ Allow me to shed some light 💡 on this paradigm-shifting legislation that is just days away from implementation. At the crux of this innovative approach resides the Fast Food Council. Bidding adieu to a state legislature-controlled wage setting, the Council is now the potentate, wielding the scepter 🤴 of setting a minimum wage for fast-food joints with 59 or more sister outlets. Things get interesting 😲 when we delve into the nitty-gritty. The Council’s jurisdiction is confined to limited-service eateries. However, the competitive zeal for employee retention is expected to prompt full-service restaurants to compete toe-to-toe with the mandated wages of their fast-food counterparts. The scope of “limited service”, according to regulators, extends to everything from traditional fast-food establishments to coffee outlets ☕, breweries 🍻, ice cream parlors 🍦 to doughnut shops 🍩. The wage-setting enters a twilight zone 🛸 when it comes to ghost kitchens and virtual brands, as the California Department of Industrial Relations is currently navigating this grey area. Peeking under the hood of the Council, it's an assorted mix of nine influential voting members, representing a diverse spectrum of fast-food workers, industry employers, and neutral individuals. So, what can employers expect in terms of wage increments? Well, the maximum increase is capped at 3.5% and is bound by the previous year's cost-of-living increment if it's below this threshold. But that's not all. The Council wields the power to suggest changes in state workplace and safety norms for fast-food workers. But remember, they are recommendations, not mandates 👷♂️. Fast-food employers and the general public can voice their views during the Council's semi-annual hearings on wage changes. As we stand on the verge of this landmark policy, several loose ends still need to be tied. Employers are yet to know the statutory time frame for minimum fast-food wage increment notifications. With this in mind, join the conversation and share your thoughts on this defining development in fast-food wages. Do you see this as a beacon of opportunity 🚀 or a formidable challenge? Let us hear your views! 💬🗣️ #franchise #franchising

My article about a new law that goes into effect in Chicago to raise the tipped minimum wage for restaurant servers and others. What seems like a straightforward issue is quite complex, and the longer-term impact of the ordinance is unclear. "Restaurants in Chicago must start paying tipped workers more per a new city ordinance that has sharply divided the restaurant industry and supporters of the law... Advocates have been demanding better wages for workers. But restaurant associations say that federal law already ensures a base minimum wage and laws like Chicago’s ordinance will reduce earnings for tipped workers. As restaurants in Chicago and across the U.S. continue to face headwinds after the COVID-19 pandemic, the impact of the city’s ordinance will be closely watched. ...This year, legislation to raise the tipped minimum wage was proposed in 17 states, including Illinois, but none passed, according to the National Restaurant Association.... The advocacy group One Fair Wage spearheaded the campaign in Chicago and called the “subminimum wage” a “direct legacy of slavery.” The group led a similar law in Washington, D.C., that went into effect May 2023. The impact there is a hint to the potential effect of Chicago’s ordinance. “We hope [Chicago] won’t follow what happened in D.C.,” said Sean Kennedy, the National Restaurant Association’s executive vice president for public affairs... The Illinois Restaurant Association, and some Chicago restaurant owners as well as servers, say the new regulation hurts them and that eateries are not fully recovered from the COVID-19 pandemic. They contend restaurants will have to raise menu prices as their labor costs increase, especially amid ongoing struggles with inflation. Subsequently, customers will tip less if food prices go up and if servers’ base pay is raised, they said. Restaurant owners could also downsize waitstaff or shift to counter service. “Restaurants will not be able to sustain another hit like this,” said Niles Mayor George Alpogianis, who owns eight restaurants. Servers at some of his restaurants make $45 to $50 per hour with tips on busy shifts...Nationally, tipped servers make a median of $27 per hour, according to the National Restaurant Association. Under federal law, restaurant owners must pay tipped workers the local hourly minimum wage if their tips plus base salary don’t reach that minimum threshold. In other words, if servers earn less than the overall hourly minimum wage, restaurateurs must pay them the difference... Rather than requiring Chicago restaurants to hike the tipped minimum wage, Sam Toia, president of the Illinois Restaurant Association, urged hefty fines and crackdowns on employers who don’t pay the legally guaranteed minimum wage. Chicago should “add more inspectors and go after bad actors,” he said." READ THE STORY HERE: https://lnkd.in/eUWM4aa2

The minimum wage for California fast-food workers is set to rise to $20 an hour in April, a 25% increase from the state’s broader $16 minimum wage. Restaurants including McDonald’s, Chipotle, Jack in the Box and others say they will raise menu prices in California in response, with some McDonald’s franchisees estimating hundreds of thousands of dollars per restaurant in added labor costs. “Everyone is going to have to pay more,” said Jack Hartung, chief financial officer of California-based Chipotle Mexican Grill. Chipotle has raised its menu prices four times in the past two years and expects to increase them a further 5% to 9% in its California restaurants to cover the higher pay required for workers. California for decades has been a fast-food stronghold, with more people working in restaurants and bars than in any other state, according to the Labor Department. It is the birthplace of McDonald’s, In-N-Out Burger and other chains, and fast-food and other takeaway restaurants employ about 761,900 people in the state, according to California’s employment department. In 2022, California passed a law instituting new oversight of the fast-food industry through state-appointed councils that could have raised sector pay to as much as $22 an hour. The restaurant industry dedicated tens of millions of dollars to invalidating the law before industry members, union representatives and the governor’s office last year negotiated a compromise. That deal set the new $20 minimum wage, and put a cap on annual increases beginning in 2025. Democratic California Gov. Gavin Newsom said the law would improve wages and working conditions for hundreds of thousands of fast-food employees in the state. Restaurant owners since then have been calculating the cost. The National Owners Association, a group of McDonald’s franchisees, estimated it will cost Golden Arches operators an additional $250,000 annually per restaurant, an amount that can’t readily be absorbed, according to an email from the group last September. For every dollar in hourly wage increases, a restaurant needs to increase prices by 2% to make up for the additional cost, industry consulting firm Revenue Management Solutions said. Jack in the Box told investors in November that its prices will rise 6 to 8 % companywide this year, primarily to cover increased wages and other costs in California. 

Curious about the latest in the restaurant industry? We've got the answers! 🔹 Job Market Trends: Is the restaurant industry adding or shedding jobs? Dive into the latest employment trends and find out how the sector is evolving. 📈 🔹 Sustainability Moves: Guess which quick-service restaurant is venturing into solar energy? 🌞 🔹 Pay Raises for Tipped Workers: Big cities continue to support restaurant workers with significant pay boosts. For instance, tipped workers in Chicago just saw their minimum wage increase to $11.02 per hour from $9.48, thanks to a new ordinance. Over the next five years, this wage will keep rising by 8% annually until it matches the city's standard minimum wage. 💵 Stay informed and see how these changes are shaping the foodservice landscape! 👉 Read more about these updates and more! #FoodserviceNews #RestaurantIndustry #JobTrends #Sustainability #EmployeeWages #Chicago https://lnkd.in/gDqEnDvs

New: California just hiked minimum wage for fast food workers. That’s just one reason some restaurant owners are replacing them with kiosks. California just raised the minimum wage for the state’s fast food sector workers by $4 to $20. As if on cue, it raised a familiar refrain that those workers would be replaced by technology, such as self-service kiosks. That’s likely to happen in some instances where business who haven’t yet done so will look to technology to help offset higher labor costs. But the reality is that automation in the services industry is already on a roll, and the restaurant industry has been embracing it for a while now, even in states where the minimum wage hasn’t increase https://lnkd.in/dwjqFHNw