The owner of MCDONALD’S has been struggling to keep his business afloat after the new law forced major changes.
Scott Rodrick, owner of several McDonald’s franchises, admits that California’s new wage laws have added new financial pressures to the business.
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“This is my family’s 50th year in the McDonald’s business and I intend to fight and survive for another 50 years,” he said. Fox Business.
Since April 1, California has required fast food franchises to pay workers $20 an hour as part of new state minimum wage laws.
The law was introduced and passed last fall by Gavin Newsom.
Under the new law, restaurant chains with 60 or more franchises around the world and limited to no table service must comply with the new salary.
The new salary adjustment has caused many owners to change their business plans, including reducing employees’ work hours or increasing menu prices.
“Restaurants in California’s quick-service industry are preparing for fast-food wage increases and the difficult scheduling, staffing and pricing decisions they are forced to face,” the California Restaurant Association said in a statement sent The NRN last month.
“We are already seeing cost pressures ripple across the restaurant industry and, indeed, beyond.
“Unfortunately, these challenges exasperate an already fragile small business operating environment, forcing business owners – of all stripes – to make decisions that impede opportunities for job growth.”
McDonald’s CEO Chris Kempczinski previously revealed that the company would have to raise its prices after news broke about the new law.
“Certainly there will be some element of this that will need to be worked through at higher prices,” Kempczinski said on an earnings call last November, The Wall Street Journal reported.
“There will also be things that I know franchisees and our teams will look at in relation to productivity.
“As all of this plays out, there will certainly be a short-term impact on franchisee cash flow in California; It’s difficult to know exactly what that impact will be because of some of the mitigation efforts.”
Since January, Rodrick has followed the CEO’s advice and increased menu prices by 5% to 7%.
However, he believes he will have to increase more from there.
“The focus is survival,” he said.
IN-N-OUT FIGHT
While McDonald’s looks to raise its prices, In-N-Out hopes to keep its menu at a stable price.
“I was sitting in VP meetings, face to face, saying, ‘We can’t raise prices this much. We can’t,'” said In-N-Out President Lynsi Synder while speaking with Today.
“Because I feel an obligation to take care of our customers.”
Snyder says he has no interest in price increases, despite new wage laws affecting California.
“When everyone else was making these leaps, we weren’t,” she said.
At one location in California, In-N-Out increased the price of its burger by 25 cents and drinks by a nickel, according to the New York Post Office.
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