California Fast Food Workers Earn $20 Per Hour: Franchisees Respond by Cutting Hours
Lawrence Cheng, whose family owns seven Wendy’s locations south of Los Angeles, now finds himself working the register and preparing food, a necessity since California's new law raised fast food workers' hourly wage from $16 to $20 on April 1.
Cheng used to have nearly a dozen employees per shift at his Fountain Valley location in Orange County. Now, he only schedules seven, covering some of the hours himself to manage the increased labor costs. “We kind of just cut where we can,” Cheng explained. “I schedule one less person, and then I come in for that time that I didn’t schedule and I work that hour.”
He remains hopeful that the busy summer season will help offset these added costs, bringing in more profit as families and students frequent fast food restaurants more often.
Experts caution that it's too early to determine the long-term effects of the wage hike on fast food restaurants. Previous wage increases in California and New York saw job growth continue despite fears of job losses, according to a University of California, Berkeley study.
In the first two months after the wage increase, the fast food industry added 8,000 jobs compared to the same period in 2023, according to the U.S. Bureau of Labor Statistics. However, many franchise operators are cutting hours and raising prices to cope with the new wage law.
Joseph Bryant, executive vice president of the Service Employees International Union, which advocated for the wage hike, noted that the higher wage is attracting better job candidates, thus reducing turnover.
However, operators like Juancarlos Chacon, who owns nine Jersey Mike’s locations in Los Angeles, have raised prices significantly. A turkey sub that once cost under $10 now costs $11.15. Chacon has also cut staffing during less busy times and reduced his workforce from 165 to about 145 employees. "I’ve never had to increase prices this much before," he remarked.
Cheng has also raised menu prices by about 8% and cut back on overtime to manage his labor costs, but he still found himself $20,000 over budget for a two-week pay period. Despite these challenges, Cheng has no plans to lay off any of his 250 Wendy’s workers.
Aaron Allen, CEO of a global restaurant consulting firm, predicts a growing divide between large corporations and smaller regional chains. Larger corporations can invest in automation and other cost-saving measures, while smaller chains might face closures or significant reductions.
Jot Condie, president and CEO of the California Restaurant Association, warned that restaurants are also grappling with rising rents and food costs. “When labor costs jump more than 25% overnight, any restaurant business with already-thin margins will be forced to reduce expenses elsewhere,” he said.
Despite the challenges, some workers are seeing positive changes. Julieta Garcia, who works at a Pizza Hut in Los Angeles, is now working five days instead of six, allowing her more time with her 4-year-old son. The higher wage also helps her pay bills on time and take her son to medical appointments.
Howard Lewis, a 63-year-old retiree working at a Wendy’s in Sacramento, is investing his extra earnings in stocks and helping his ex-wife with car repairs.
Governor Gavin Newsom emphasized the necessity of the wage hike in his state-of-the-state address, stating, “We are a state that gives a damn about fast food workers — who are predominantly women — working two and a half jobs to get by.”
For Enif Somilleda, a general manager at a Del Taco in Orange County, the wage increase has been a mixed blessing. While financially beneficial, it has also meant more work with fewer staff members per shift. “Financially it has helped me,” she said. “But I have less people so I have to do a lot more work.”
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