This result shouldn’t surprise anyone. Inflation has driven up operational costs for businesses across the US and shrunk profit margins for major food chains in the past few years. This has led to higher menu prices (like the “$18 Big Mac”) and slowing sales for every major fast food company. Another anchor dragging on the restaurant business in many regions was at least two years of covid stimulus coupled with rent moratoriums, creating aggressive labor shortages and raising wages in upwards of $16 per hour for brand new no-skill employees.
Small chains and mom-and-pop businesses simply can’t compete. Larger chains raised prices but have also been forced to reduce employees and labor costs through automation, but the layoffs are just getting started.
Enter California’s “FAST Recovery Act” passed into law in 2022 and going into effect in April of this year – The legislation requires a particular set of food chains dealing in certain kinds of products outlined in the law to raise their minimum wages (already at $16 an hour on average) to $20 an hour. The income increase is limited to chains that have 60 or more locations in the state of California (meaning, the combined number of locations regardless of who owns them must be higher than 60) Keep in mind that while many of these chains are associated with international corporations, they are owned and run by franchisees; they are still family run businesses.
Mass layoffs are now a guarantee with many restaurants already firing thousands of workers as well as some chains closing multiple locations because the cost of operation will be higher than the benefits.
“Restaurants are struggling to stay above water, and Democrats just threw them an anvil,” California Assembly Republican leader James Gallagher told FOX Business. “We warned Democrats this new mandate would cost jobs. They ignored us, and here we are with the highest unemployment rate in the country poised to get even worse.”
The “digital options” that many fast food franchises are referring to are automated ordering systems as well as robot workers which are slowly but surely becoming more cost effective than human laborers. At least one fast food location in California is testing a fully robotic restaurant with no human workers.
Layoffs will accelerate along with the normalization of the technology, and the high wages that are crushing profit margins are making the decision easy for business owners. Some chains have reported that they will be forced to cut working crews in half; meaning, those working will be paid $4 an hour more, but they’ll have to work twice as hard per shift. The most probable end result in the next 5 years will be the majority of chain restaurants operating with a tiny crew of humans working alongside increasing automation.
The political left is already accusing the fast food industry in California of “retaliation” for the wage increase which was negotiated in part with restaurant workers unions involved. This is what they asked for, and now it’s happening; for every action there is an equal and opposite reaction.
The problem that is typical among leftists is a lack of understanding when it comes to the basics of business operations. Profit margins can be thin and money can still be made due to sheer scale, but revenues at that level are often calculated in cents or fractions of a cent per sale.
This kind of business model is beyond the comprehension of the average socialist. They simply see workers whose wages are not keeping pace with the high cost of living in California and assume business owners are greedy. Instead of confronting the state government that caused higher prices through extreme regulation and taxation, they want to give that very government even more power to punish businesses that are already under pressure.
Well, get ready for more job losses and get ready for the takeover of fast food robots because these are the only options franchise restaurants have left. They might be able to force business owners to pay $20 an hour for no-skill labor, but they can’t force those business owners to keep hiring.
Furthermore, it’s likely that the FAST Act will trigger yet another tsunami of businesses leaving California for other states with less bureaucracy and a less demanding labor market. Meaning, more jobs for red states and more unemployment for California.
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The first time the morons protested stating they deserved a living wage for flipping burgers and smoking weed, anyone with 2 brain cells could see they were protesting their way to unemployment.
Of course, once businesses shut down or leave the liberals will blame it all on racism.
Unfortunately, as the ship sinks the scumbags who created the problem will move to ‘nicer’ places and turn them into hell-holes as well.
People who identify as ‘democrats’, please do the world a favor and play in a busy highway! Seriously.
“Meaning, more jobs for red states and more unemployment for California.”
The moral of the story: Market forces will always override assholes.
Fast food in cali ????????
I thought them faggot-worshipers only ate nuts and berries.
They also eat a lot of beans and franks, especially in Hollywood.
Beanie Weenies
There is no inflation after all. Auntie hopes Crazeefornians continue to vote for these policies and ALL but the fanciest restos go out of business. That will assuage the savages. /s
No problem, California has lots of unemployment compensation money. Won’t be quite $20 an hour though, or even $10 an hour.
My first job at McShit in 1979 I was making something around $2.85 an hour. I NEVER made minimum wage. They asked me if I wanted to work the closing shift and I asked “how much more does it pay?” They said “$.25 more” and I said “hell yes.” I provided the value they needed to compensate for a higher wage. If the ONLY THING YOU DO to increase how much you are getting paid is to BEG the GOVERNMENT to FORCE your employer to pay you more…then you should have been FIRED a long time ago.
For the completely unskilled (sadly, most today can’t even read, write, or do basic math), the lowest rung of the ladder of success is all that is available (unless you are hot and willing to prostitute yourself either in person or on a webcam). EVERY increase in the federally or state mandated minimum wage, is simply raising that lowest rung further and further out of reach. While they claim to cameras that they are trying to help out the worst off, they in fact are of course MOSTLY HURTING the worst off.
And obviously, anyone making $20 an hour or above will demand an increase. Why wouldn’t they, and why shouldn’t they think they deserve more? When I started working at McD’s, there were no automated cash registers. We had to write down the entire order by hand and ADD UP all the prices by hand, then figure out change, etc. Now you are lucky if you can get someone to put down their phone and dig their hand out of their ass long enough to actually take your likely incorrect order. Bring on the robots and the ordering kiosks.
Starred at $1.60/hr as a bag boy in 1972. Fifteen, work 60 hrs a week in the summer. Can’t remember any work permit, just had to get a SS number to work.
1957. 10 years old. $1 a day working on a hog farm. 400-500 head of hogs. Tools? #14 scoop and a 6 tine pitchfork. Bonus? Great smell all day every day.
The mantra is that inflation is under control and the economy is doing great. But wait. We need to give unskilled workers $20/hour so their purchasing power can keep up with inflation, and we need to let college grads default on their loans so they can overcome the difficulties they’re having with the economy.
I went around and around trying to explain to a friend why this is a bad thing. She kept insisting “corporations are greedy and can afford it.” We finally agreed on one thing: fast food is toxic garbage, so maybe it’s okay for them to go out of business.
Women have and share “feelings”. They don’t actually think. They confuse emoting with actual thought.
There has to be a level of basic respect between economics and human life. If there isn’t then you’re just a slave and no one wants to be that. Why is there so much of this all or nothing thinking?
Yeah, inflation doesn’t affect producers, raw materials, energy, wages, or transportation, just consumer prices! (Sarc)
Or as my wife always asks them, why weren’t the same people greedy under Trump?
I worked at the Holbrook Perennial farm corner of Broadway and sunrise highway in the late 1970s until Early 8os I think old man Fusco paid us crazy kids 2 bucks an hour cash . We thought we were rich ! We drove tractors , mixed up loads of potting soil in an old cement mixer we grew seedlings and plants in the greenhouse . Come may we planted acres of plum tomatoes,eggplant Italian horn peppers. We even grew a few pot plants in the horseshit piles out back.Boy did we have fun.
And the lesson to be learned here is: Do stupid things, get disastrous results.
No, those who cause the problems will NOT be facing the consequences.
Well, I read some time ago that In-n-Out was building an east coast headquarters in the Nashville, TN metro area. Interesting? Why would any business want to stay in Cali? Unfortunately, many of the Bolsheviks from there have destroyed other pristine areas of the FUSA.
I am still amazed they haven’t gone franchise model.
Can’t wait to see the videos of ghettopotamuses going behind the counter & taking on the robots that serve them the wrong order!
They will be getting their order from a tray slot just like their men do.
Yeah,that was funny,but now i got coffee on my key board.
Wire supremacy
Silicon justice warrior
JP, That’s ghettopottomi mind you!
Yeah,i agree. Leftists don’t understand cause and effect. Several of my extended family’s woke USC Columbia coeds were displaying both their nose rings and political/economic opinions at our last gathering. These young women were far,far smarter before they were “educated”.
Sorry, lefties do understand. Part of the plan to destroy the country.
So … we won’t be needing all of those gender studies graduates with masters degrees after all …
All intentional to put fast food aka meat out of business. Don’t fret, Bug Shack will replace them.
I’ll have a cricketwich and a mealworm smoothie with salted caramel please.
Sorry, the shake machine is still broken, but the federal government has created a new agency to get on it immediately.
My story about asking for a raise goes back more than fifty years, maybe 1970, and maybe at that time I might have been making $4,00 an hour, that’s just a guess.
So, for whatever reason I decided to ask for a raise and when I approached my boss about it his response was that it was bad timing due to various problems and that there was a shakeup in upper management, we now had a new CEO, but if I insisted, he would put in a request for my raise. I said screw it, go for it.
A week or so goes by and my boss called me into his office to discuss my raise request. I can clearly see something’s not right.
All wage increases had to go through the CEO for his approval. This was the first wage increase he had presented to the new CEO. In dealing with the Old CEO, he was in the habit of asking for more than he expected to get because the Old CEO would always deny what was requested and knock it down to half or less. So, he put in a wage increase request of 50 cents/hr expecting to get knocked down to maybe 15 or 20 cents. Turns out dealing with the new CEO was completely different. The new CEO looks at the wage increase for 50cents/ hr. and asks my boss “is he worth it”, which of course at that point my boss has to say “Yes”, and with that my wage increase was approved.
Why was my boss upset – I was now making more than he was.
All part of the plan to get rid of more and more businesses that you drive to. Notice how EV charging stations have no convenience store? Why aren’t new gas stations adding charging stations? The 15-minute cities will be implemented slowly then suddenly. Liberals will call them 15-minute cities you and I will call them internment camps.
That’s a good point. What I’m wondering is how they will keep the blacks in one place. Compliance is not their thing. Or is the 15 minute prison only for the pale faces? And why would people be motivated to work if they can’t spend their money as they like and have to live in an open air prison and eat bugs? Won’t that drive people to become seriously unmotivated?