California fast food restaurants forced to close over minimum wage hike: 'Business owners are fed up'
CABIA President Tom Manzo joined 'Fox & Friends' to discuss how the minimum wage increase has impacted the fast food industry as thousands are forced out of work.
California's fast food industry has taken a major hit since Gov. Gavin Newsom hiked the state's minimum wage to $20 as thousands have been forced out of work and consumers are forced to pay inflated menu prices.
The California Business and Industrial Alliance (CABIA) President Tom Manzo detailed why businesses are "fed up" with California's policies during "Fox & Friends" while Americans struggle to afford the commodity that is now considered a "luxury item" by some consumers.
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"The biggest issue California faces is continued increased cost and a continued anti-business climate," Manzo told Lawrence Jones on Monday. "That's why we decided to run this ad in the first place, and… business owners are fed up… Quite frankly, it's having a ripple effect now on everybody."
"People can't afford fast food when… it should not be a luxury item," he continued. "Fast food isn't a luxury item."
CABIA said nearly 10,000 jobs have been cut across fast food restaurants since Newsom signed California Assembly Bill 1228 into law last year. To highlight what it says are the unintended consequences of the law, CABIA has taken out an ad in Thursday's statewide edition of USA Today with mock "obituaries" of popular fast food brands.
CABIA's ad highlights multiple restaurants that have had to raise prices and lay off workers to stay afloat and, in some cases, shut down stores. The ad features news clips documenting changes made by brands like El Pollo Loco, Subway and Burger King across the state.
The California Business and Industrial Alliance (CABIA) said nearly 10,000 jobs have been cut across fast food restaurants since Newsom signed California Assembly Bill 1228 into law last year. To highlight what it says are the unintended consequences ('Fox & Friends' screengrab)
"That's why we continue to advocate because legislators, the governor, they need to wake up," Manzo said. "You cannot be this anti-business."
"We're going to continue to fight," he continued. "We advocate for small to medium-sized businesses, people that don't have a voice. And… California is a great place to live. It's just we need to change the direction. We need to change the direct trajectory, and that's what we're going to do. That's our mission."
Newsom's office took issue with the CABIA's claims about fast food job losses. A spokesperson for the governor cited the U.S. Bureau of Labor Statistics, claiming that 4,500 jobs were added in limited service restaurants in California from September 2023 through April 1. The governor's office said 6,600 fast-food jobs were added in the Golden State from April 2023 through April 1.
NEARLY 80% OF AMERICANS NOW CONSIDER FAST FOOD A ‘LUXURY’ DUE TO HIGH PRICES
Meanwhile, menu prices have also surged as a result of the wage hike. According to a survey by LendingTree, 78% view fast food as a luxury while 68% agree that prices for fast food items are too expensive.
Restaurant Business editor-in-chief Jonathan Maze pushed back against the notion the minimum wage increase helps workers during "Fox & Friends First," citing concerns about the timing and severity of the wage increase.
California minimum wage hikes spell doom for more fast food spots as they lose 'value' factor
Jonathan Maze, editor-in-chief of Restaurant Business, sounds off on the consequences California's minimum wage hike has had on fast food establishments in the Golden State.
"It's a tough thing to do," Maze said. "You got two issues. You have the fact that it was done almost overnight. You have the fact that it was a 25% increase in the wage rate. Both of those things, happening simultaneously, is a really hard thing for restaurants, bottom line, and… you're seeing the effects of it."
Maze argued that, because prices have surged, Americans are dining out less often than before as it continues to impact the industry's "reputation" as an affordable option for everyday families.
"This has been a challenging environment," Maze said. "If you looked at what McDonald's had reported just a couple of weeks ago, their prices are up 40% since 2019. Their costs are up since 2019. You had, right after the pandemic… a dramatic increase in food costs. You had a dramatic increase in labor costs. Insurance costs are up. Lending rates are up. Everything costs a lot more. Construction costs are up, and that requires companies to increase prices."
"The result of all of this is that fast food has largely lost its reputation… as a value player," he continued. "The result of this is consumers are dining out less often. They're not going to… McDonald's or other places as often as they had been."
Gxstocks' Louis Casiano contributed to this report.
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