Tyler Bindi’s Post

"Some pizza-chain operators in California are laying off drivers ahead of the wage law’s start and farming out delivery service to apps. Franchisees for Pizza Hut and Round Table Pizza, a chain of around 400 units founded in Menlo Park, Calif., have said they plan to lay off around 1,280 delivery drivers this year, according to records that major employers must submit to the state before large layoffs.  In San Jose, Brian Hom, owner of two Vitality Bowls restaurants, now runs his stores with two employees, versus four workers that he typically used in the past. That means it takes longer to make customers’ açaí bowls and other orders, and Hom said he is also raising prices by around 10% to help cover the increased labor costs.  “I’m definitely not going to hire anymore,” he said. Proponents of the California law setting the new minimum food-worker wage and a state-appointed council overseeing it have said the measures would help improve the lives of hundreds of thousands of local workers. Organized labor groups have said they hope to replicate the law in other states. The coming minimum-wage increase for California fast-food workers at bigger chains represents a 25% increase from the state’s broader $16 minimum wage. McDonald’s, Chipotle Mexican Grill, Jack in the Box and other restaurant chains have said they would raise menu prices in California to offset some of the cost.Many California restaurant operators are looking for other ways to cover the cost, like reducing hours, closing during slower parts of the day or serving menu items that take less time to make.  “I can’t charge $20 for Happy Meals. I’m leaving no stones unturned,” said Scott Rodrick, owner of 18 McDonald’s restaurants in Northern California. Other restaurateurs, including Hom of Vitality Bowls, said they are turning down opportunities to open new locations in California and looking at expanding in other states instead.  California had 726,600 people working in fast-food and other limited-service eateries in January, down 1.3% from last September, when the state backed a deal for the increased wages. Total private employment in the state declined 0.2% over that period, according to state figures.  Economists have long debated minimum-wage increases’ effect on employment. A study by the nonpartisan Congressional Budget Office last December found that raising the federal minimum wage to $17 an hour from $7.25 by July 2029 could increase wages for more than 18 million people, but also could reduce employment by about 700,000 workers.  Higher wages would increase employers’ costs, raise prices for consumers and depress some demand, the CBO found. Some employers would also turn to technology to try to reduce their reliance on low-wage workers."

Overall, the impact of the California Fast Food Sector Minimum Wage Ordinance on non-fast food restaurants and businesses like Boomers depends on various factors, including how we respond to the changes needed to increase wages in the “new” labor market. Additionally, we must decipher whether we can effectively manage any labor cost increases in the form of increased guest prices. Further increasing inflation in the State of California to an unprecedented new level, directly due to this new Fast Food Minimum Wage Ordinance, businesses cannot just absorb this new cost by the State of California. Here are four factors that Boomers must take into consideration: 1. Competitive Pressure: Non-fast food restaurants and businesses will face increased pressure to raise wages for their employees to remain competitive in the labor market due to the Fast-Food Minimum Wage Ordinance. Thus, if fast food workers are earning higher wages, employees in other sectors will seek similar increases, especially since there are overlapping job requirements and skills needed. 2. Operating Costs: A rise in the minimum wage leads to increased operating costs for all other businesses, including non-fast food establishments. Labor is a significant cost for any business, and an increase in the minimum wage will directly impact the bottom line resulting in increased prices for guests, reducing profits for businesses, or both. 3. Strategy Changes: Businesses may need to adjust their operations in response to higher labor costs resulting in reduced operating hours, cutting back on employee benefits, increasing automation with fewer employees and finding other ways to improve efficiency. These adjustments will have implications for both employees and guests of Boomers Parks. 4. Economic Impact: There are broader economic impacts from minimum wage increases, including effects from less job creation, guest spending and economic growth. While proponents of higher wages argue that a wage increase will stimulate economic activity by putting more money in workers' pockets, opponents often raise concerns about potential job losses, reduced business investment, or closure of these businesses. Business owners do not have unlimited lines of credit or cash in surplus to pay for these types of expenses that get handed down to businesses from government departments and organizations. https://lnkd.in/eEeRPKYK

Food Chains Cut Jobs Before New Law Hit In recent developments, California's minimum wage law has sparked a wave of adjustments within the food and retail sector, with many chains re-evaluating their staffing to adapt to the new financial landscape. This move has ignited a broader conversation about sustainability and innovation in retail operations nationwide. At VenHub, we closely monitor these industry shifts and explore how our autonomous retail solutions can serve as a pivotal tool for businesses navigating the complexities of changing wage laws. Our cloud-based system enables remote monitoring and management of store operations and inventory levels, offering a seamless, efficient path forward in these challenging times. With API integration capabilities, VenHub effortlessly connects with other business tools and platforms, ensuring our clients can maintain profitability while delivering exceptional service without the added pressure of increased labor costs. Our commitment to innovation and adaptability positions us as a valuable partner for retailers aiming to thrive amidst evolving economic conditions. Stay tuned for further insights on how VenHub is leading the charge in reshaping the retail landscape, offering solutions that blend cutting-edge technology with practical, cost-effective strategies. Visit invest.VenHub.com to learn more.

What's it going to take to tackle a 25% increase to the minimum wage on April 1 in California? As this article discusses, talking about the pending wage rate increase and setting expectations with guests helps to tamp down "sticker shock," but still being bound by similar financial constraints, guests will still change purchase behavior to fit their budget - whether by way of fewer items, less expensive items, or fewer visits. If you're operating a restaurant in the Golden State, this is exactly why you need Buxton Road Strategy & Insight on your side. Buxton Road Strategy & Insight gives its QSR clients: - Individual service and attention - Customized menu pricing guidance, support, and execution you simply cannot get from your brand or a big consulting firm - Analytics to ID and quantify non-pricing levers (guest satisfaction, operational performance, new ordering platforms) you can pull most effectively to supplement your price increases and minimize labor cost impact The best part? This service and support is genuinely affordable and pays for itself with only the slightest improvement in pricing performance. Don't wait for help. Get a head start and begin a trial service with Buxton Road Strategy & Insight today. Contact: nick@buxtonroadsi.com

Do you remember the anxiety in the restaurant industry when the $15 minimum wage was looming? There was so much fear about how it might impact, and even destroy, businesses. Fast forward to today, with the advent of COVID-19 and the ongoing labor shortage in the United States, the landscape has shifted. Restaurants are now offering wages higher than $15 per hour to stay competitive. In places like Los Angeles, a proposed $22 minimum wage adds another layer of complexity. So, how can a restaurant not only survive but thrive in these challenging conditions? Contributing columnist, David Scott Peters offers these effective strategies for navigating wage increases in the restaurant industry. #restaurantindustry #minimumwage #insights

The numbers are rolling in on California's $20 minimum wage for fastfood workers. According to a new survey by the Employees Policy Institute of 182 Fast Food Operators (most with multiple locations) in California: 67% of restaurant operators said the wage increase would cost their business at least $100,000 per location. About one in four said it would cost more than $200,000 per location. A majority of restaurants said they have already raised menu prices (98%), reduced work hours for employees (89%), limited overtime or pick-up opportunities (73%) and reduced staff or consolidated positions (70%). Many restaurants said they will be considering doing similar actions in the coming year. Meanwhile, 92% of survey respondents expressed concerns about how raising menu prices will negatively affect the number of customers who visit their restaurants. The minimum wage increase for fast food workers also affected owners’ thoughts about expansion, with 73% of respondents saying they are less likely to expand inside California and 59% saying they are more likely to look for growth opportunities outside of the state. Meanwhile Chevron with a 100+ year history being based in Cali is leaving for Texas....

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

Wait: Is The Data Skewed On How $20 Per Hour Fast Food Wages Are Affecting Restaurants? This comes courtesy of Yahoo! Finance and The LA Times: "A full-page ad recently placed in USA Today by the California Business and Industrial Alliance asserted that nearly 10,000 fast-food jobs had been lost in the state since Gov. Gavin Newsom signed the law in September. The ad listed a dozen chains, from Pizza Hut to Cinnabon, whose local #franchisees had cut employment or raised prices, or are considering taking those steps. According to the ad, the chains were 'victims of Newsom's minimum wage,' which increased the minimum wage in fast food to $20 from $16, starting April 1." But Tom Manzo, a business lobbyist, said the statistics are misleading: "Here's something you might want to know about this claim. It's baloney, sliced thick. In fact, from September through January, the period covered by the ad, fast-food employment in California has gone up, as tracked by the Bureau of Labor Statistics and the Federal Reserve. The claim that it has fallen represents a flagrant misrepresentation of government employment figures." He goes on: "Something else the ad doesn't tell you is that after January, fast-food employment continued to rise. As of April, employment in the limited-service restaurant sector that includes fast-food establishments was higher by nearly 7,000 jobs than it was in April 2023, months before Newsom signed the minimum wage bill." You can find the rest of the article on Yahoo. https://lnkd.in/eS-yks9c And here's what the CEO of American QSR said about about fast food wages in California, and how the restaurant industry is dealing with them:  https://lnkd.in/eZC2ykn3 #fastfood #wages

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

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.