LABOR TRENDS
How California restaurants are adapting to higher wages Restaurants have raised prices to offset the $20 wage. But how much depends on the concept. Others look to technology and menu innovation for solutions. R estaurant operators in California have spent months testing and im- plementing strategies the company has formed a task force to develop strategies to deal with the law’s impact. Those efforts include spending $15 million on ad- vertising and other efforts in the state, which Bloomberg reported earlier this week. The goal is to get customers ex- cited about coming in, which also means the return of bagel breakfast sandwiches in the state, which the company hasn’t had on the menu since 2020. By Jonathan Maze Editor-in-Chief Restaurant Business
the economy. “We’ve taken a cautious ap- proach on menu pricing,” Ellison said. “We’re not looking to say pric- ing is going to solve this problem for us today. The macros for the con- sumer are tight today.” To be sure, operators are defi- nitely raising prices in California to offset the higher labor costs that have come with the $20 wage. The wage is part of a law, known as AB 1228, that created a council to regulate and set wages for fast-food chain restaurants. The result was a sharp, immediate increase in wages by about 25%, a minimum that other businesses and even other restaurants like independents or full-service concepts will not have to abide by. It’s not just regular workers. More experienced employees and even managers will get raises, too. “There will be a ripple effect,” said Jim Bit- ticks, president of Dave’s Hot Chicken.
to increase prices and develop effi- ciencies to offset the $20 fast-food wage the state implemented on April 1. But it’s still too early to tell ex- actly what the true impact from the new law will be, at least accord- ing to a panel of operators at the Restaurant Leadership Conference, moderated by Restaurant Business executive editor Lisa Jennings. How much of an impact the law will have likely will depend on the brand and its customers. At McDonald’s, where operators have been raising prices for months,
“We have realized that we are unable to solve our way out of this challenge just with price,” said Kerri Harper-Howie, a 21-unit McDonald’s franchisee in Los Angeles County. “We can’t do it. Our customers are price sensitive.” Diversified Restaurant Group op- erates about 200 of its 360 loca- tions, most of which are Taco Bells, in California. SG Ellison, CEO of the operator, agreed that the company can’t simply rely on pricing, citing
‘Be ready for it, because it’s coming’ Restaurant Leadership Conference speakers share how they’re adapting to rising wages in California, and whether other markets will follow suit.
https://vimeo.com/942129127
Restaurant Leadership Conference 2024 20
PHOTO CREDIT: W. SCOTT MITCHELL PHOTOGRAPHY
Powered by FlippingBook