California fast-food franchise owners downsize to survive as new minimum wage weighs them down
Wendy's franchisee Lawrence Cheng and Jersey Mike's franchisee Juancarlos Chacon told the Associated Press that minimum wage requirements have put a financial strain on their locations.
California's new $20 minimum wage for fast food workers has come at a burdensome cost for franchise owners.
Not only have many been forced to make some tough decisions – slashing hours and cutting out jobs, but now, in some instances, they're even filling in for others to keep things running.
"I schedule one less person, and then I come in for that time that I didn’t schedule and I work that hour," Lawrence Cheng, a franchisee who operates several Wendy's locations in Southern California, told the Associated Press.
At the Fountain Valley location he operates in Orange County, Cheng's quantity of over a dozen employees now sits at seven for afternoon shifts after reducing hours and cutting overtime, leaving him to fill in the gaps in addition to mitigating higher costs.
His struggle with the minimum wage hike isn't isolated, however.
Scott Rodrick, owner of the McDonald’s at Stonestown Galleria just southwest of San Francisco, went out of business last month, citing economic challenges like the wage increase.
"The unprecedented changes to the economic landscape of California, coupled with a host of ill-timed legislative mandates, greatly narrowed the restaurant’s path to extending its tenure into a new term," he told Fox News Digital, in part.
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His McDonald's location is one among other fast food locations – including Red Lobster, Arby's, Rubio's Coastal Grill, and Fosters Freeze that have shuttered locations since the hike.
Juancarlos Chacon, who operates nine Jersey Mike's locations in the Los Angeles area, is also feeling the weight of the new mandate.
He told the Associated Press he was left with no choice but to raise prices and cut back on morning and evening staffing to focus on the busier lunch hours in light of the change.
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"I’ve been in the business for 25 years and two different brands and I never had to increase the amount of pricing that I did this past time in April," he said.
It's also affecting customers, who are shaving additional items off their orders to help mitigate higher costs, the report continued.
California's $20 minimum wage requirement for fast food workers is $4 higher than the $16 average for other industries in the Golden State, which is still more than double the federal minimum wage of $7.25.
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FOX Business' Kristen Altus contributed to this report.