via MSN:
California’s recent hike in the minimum wage to $20 an hour has sent shockwaves through the fast food industry, particularly affecting McDonald’s franchises. Franchise owners are grappling with the unprecedented impact of the wage increase, which has led to higher operational costs and increased menu prices. The situation has become so dire that some McDonald’s locations are on the brink of closing their doors.
Scott Rodrick, who owns 18 McDonald’s franchises in California, has been vocal about the challenges posed by the new minimum wage law. Rodrick described the past few weeks since the law took effect as a “whirlwind” and emphasized that the impact on the franchise business model in California is “unprecedented.” He noted that while raising prices is a necessary step to relieve margin pressure, it must be done thoughtfully. Charging exorbitant prices, such as $10 for an Egg McMuffin or $20 for a Big Mac, is not a viable solution.
- California Fast-Food Bill (AB 1228): In September 2023, California lawmakers passed a landmark fast-food bill known as AB 1228. This bill includes a wage floor of $20 for California workers at fast-food chains with at least 60 locations nationwide, starting from April 1. While this will bring a significant raise for many workers, some McDonald’s franchisees are concerned about the impact on their operations during a challenging labor market and high inflation. The National Owners Association, an independent advocacy group of more than 1,000 McDonald’s owners, projected that the bill would cost each restaurant in the state $250,000 annually1.
- Fast Food Worker Protections: In late 2022, the FAST bill (Fast Food Accountability and Standards Recover Act) was passed, which could force fast-food restaurants in California to pay employees up to $22 per hour. McDonald’s CEO expressed concerns about the feasibility of operating in California under these provisions2.
- Minimum Wage Hike in California: California implemented a minimum wage hike, setting a baseline pay of $20 per hour for fast-food workers, effective from April 1, 2024. McDonald’s had warned that this increase would impact its franchisees3.
These news items highlight the ongoing challenges and changes in the fast-food industry in California, particularly for McDonald’s and its franchisees.
h/t general mishka