California fast food workers now earn $20 per hour. Franchisees are responding by cutting hours.

[Yo_Mama_Been_Loggin]

LOS ANGELES (AP) — Lawrence Cheng, whose family owns seven Wendy’s locations south of Los Angeles, took orders at the register on a recent day and emptied steaming hot baskets of French fries and chicken nuggets, salting them with a flourish.

Cheng used to have nearly a dozen employees on the afternoon shift at his Fountain Valley location in Orange County. Now he only schedules seven for each shift as he scrambles to absorb a dramatic jump in labor costs after a new California law boosted the hourly wage for fast food workers on April 1 from $16 to $20 an hour.

“We kind of just cut where we can,” he said. “I schedule one less person, and then I come in for that time that I didn’t schedule and I work that hour.”

Cheng hopes the summer when business is traditionally brisk with students out of school and families traveling or spending more time eating out will bring a better profit that can cover the added costs.

https://finance.yahoo.com/news/california-fast-food-workers-now-050715601.html

[SWBTATTReg]

1. I suspect that these businesses that seem to be yelling and screaming about the higher labor costs, having

in years past gotten a break on these labor costs vs. other industries who paid ever-increasing higher wages, will only hurt themselves in the end. Sure, they can threaten to close, to cut hours of workers, etc., but then the quality and food service will suffer.

Fast food is a crossroads in today's world, and their days of cheap labor is over and done w/ (and of course no benefits what-so-ever).

[Metaphorical]

2. Weeding out barely surviving businesses

There are two ways of looking at stories such as this one. The media usually picks this up as:

1. Look at how terrible government regulation is, that businesses are having to cut back or shut down because the cost of labor is now so high.

or

2. If a business is dependent upon paying it's workers less than a living wage, then perhaps it shouldn't be in business in the first place.

Franchises have long been, to me, a truly exploitive business practice. Franchise owners end up paying a huge amount in licensing fees, specific (usually franchisor supplied) equipment, and so forth, then has to pay labor costs on top of that. The franchisor, on the other hand, bears almost none of the actual costs, keeps the operations mostly off their own books, doesn't have to pay for labor, yet still gets the marketing benefits of having the brand. Workers for the franchisees have no career mobility, have lousy benefits, and all too often are undocumented immigrants who have little recourse to legal representation.

I have to suspect that as demographic trends continue towards smaller (or no) families, franchises will be the canaries in the coal mine of businesses to go under because they are truly not viable without labor that will soon not be there..

[MichMan]

4. "Workers for the franchisees have no career mobility, have lousy benefits, and all too often are undocumented immigrants

In my experience, the Mom and Pop stores don't pay substantially more in wages and benefits than the franchises.

[GPV]

3. Of course!