With California’s new fast food minimum wage law set to take effect in one week, some restaurants are laying off staff and reducing hours to hedge against rising payroll costs.
The new law, which was signed by Gov. Gavin Newsom signed last September, was the focus of attention in Sacramento recently as it was reportedly negotiated with non-disclosure agreements.
The backstory: Late last year two major Pizza Hut franchisees prepared for the new mandate by laying off over 1,200 employees.
- The employees received their notices last December and worked into February.
Driving the news: McDonald’s, Chipotle Mexican Grill and Jack in the Box are among the state’s fast food restaurants that have said they would raise menu prices to help offset costs come April.
- El Pollo Loco told investors earlier this month that it would automate some of its salsa-making to cut costs.
- Jack in the Box is also testing robots to fry food and automated drink dispensers.
- Excalibur Pizza, the owner of some Round Table Pizza locations, reported to the state that it is eliminating 73 drivers, which is 21 percent of its workforce.
Go deeper: California’s rising fast food labor costs are also causing small operators to rethink future plans.
- Brian Hom, the owner of two Vitality Bowls restaurants in San Jose, told the Wall Street Journal that he has two employees at his restaurants, rather than the four he previously used.
- He is also raising prices by around 10 percent.
