The upcoming increase in California’s minimum wage to $20 per hour is prompting significant changes in the fast food industry, particularly at LA Fatburger restaurants. Marcus Walberg, who owns four Fatburger franchises in Los Angeles, has already raised menu prices by 8% last year and is planning an additional increase of up to 10% in response to the new wage law set to take effect in April.
To offset the impact of rising labor costs, Walberg is taking several cost-cutting steps. These include reducing work hours for employees and eliminating paid leave programs. This strategy is aimed at managing the increased operational costs that will result from the higher minimum wage.
This situation is not unique to Fatburger, as other fast-food chains like McDonald’s and Chipotle are also adjusting their prices in California for the same reasons. Pizza Hut, in a more drastic measure, is laying off all its delivery drivers across California franchises, opting to partner with third-party delivery apps like Uber Eats, GrubHub, and DoorDash instead.
These changes reflect the broader challenges and adaptations businesses are facing due to legislative changes in wage policy. While the wage increase aims to support workers amidst rising living costs, it also imposes a financial burden on employers, particularly in the fast-food sector, leading to such strategic business adjustments.