California’s new Fast-Food Council held its second meeting July 31, hearing from workers who want stricter oversight and higher pay, and owners and operators of affected restaurants asking for more clarity and cautioning against more rules.
Legislation passed last year ordered all fast-food chains with at least 60 locations nationwide to pay at least $20 per hour in California, and created the council to oversee future raises. The council consists of nine voting members—two industry representatives, two representing restaurant owners, two representing employees, two advocates for employees, and an unaffiliated member of the public—as well as two non-voting members to oversee future raises and other changes.
“We know that truly transforming fast food into a fairer, more sustainable industry takes more than a onetime raise,” the letter read.
The group also requested protections for the higher wages and rules to provide stability for employees’ scheduled hours. The letter alleged that “frequent, arbitrary, and often retaliatory changes... exacerbate the impacts of poverty and housing insecurity.”
Julieta Garcia, a Pizza Hut employee in Los Angeles, told the council that while an April wage hike has benefited her family, more raises are needed to keep pace with higher rent and inflation.
Business Owners
On the other side of the issue, the owner of a Sacramento-based Arby’s franchise said the recent minimum wage hike—to $20 per hour from $16—is “significantly impacting” his business. Since then, he told the council, he raised prices and cut hours while trying to maintain profitability.“That impacts our customers,” Tegvir Toor said during the hearing. “Families are already struggling to make ends meet, and so raising prices is an extremely difficult decision to make, but for the survival of our business, we had to consider it.”
Toor said sales have decreased by as much as 23 percent over the past three months.
“I have been forced into something I call survival mode,” Toor said. “I lose sleep about what I can do for my business. I worry about my team members.”
Before the wage hike, he was looking to expand, but now he’s concerned about the future, he said.
“I have taken money out of our own savings to make things work,” Toor said. “But I don’t know how long I’ll be able to sustain like that moving forward.”
Other owner-operators expressed “frustration” with the current guidelines.
Gabriela Campbell, who owns a Handel’s Ice Cream franchise with her husband in Santee in San Diego County, told the council that she has sought clarification for the past nine months about what establishments are affected by the minimum wage hike.
“I was told in no uncertain terms that ice cream parlors were not the legislative intent of this bill, but the roadblock I hit was finding the agency or person to help,” she told the council.
Her 24 employees are mainly high school and college students, and many are young teens living at home who cannot work more than four hours per day or past 10 p.m. on schooldays, Campbell said.
She told regulators that ice cream parlors can’t afford to pay higher wages. Several other Handel’s owners from across the state concurred.
Another ice cream business owner said the law is confusing.
“If it applies to us, we cannot operate and will have to shut down our family business that has been operating for the last 10 years,” said a Dippin Dots owner who identified himself as Ash on a Zoom call to the council.
Employee Hours
Matt Sutton, senior vice president of government affairs and public policy for the California Restaurant Association, told regulators that the jolt of a 25 percent minimum wage increase is resulting in employee hours being cut across the industry, a hiring slowdown, and a reduction in overtime opportunities.“It’s a massive experiment,” he said. “We know the trends are real. What we’re seeing now are the economic reactions to that shock.”
He urged caution and advised the council to consider the widespread implications of its decisions—noting that even restaurants and businesses not included in the wage hike law are impacted by the change to the labor market.
“This is a shock beyond the restaurant industry, and it’s going to ... be felt in other sectors and the economy,” Sutton said.
One industry executive agreed and told the council that labor is the highest cost in the restaurant business.
Council Deliberations
Council members varied in their approach to addressing concerns raised by public commenters. Some sought to investigate business practices in restaurants, potentially with surprise visits.Others said the far-reaching impacts of the panel’s decisions need to be weighed carefully.
“Our whole objective here is to help people in their work,” said council member Richard Reinis—one of the restaurant owner representatives.
“We can’t do much for them if they’re unemployed. If we make the wrong decisions, the unintended consequences could be closure of stores and the loss of jobs.”
Several council members agreed that the group needs to balance the needs of all stakeholders.
“We want to make sure that we’re taking care of employees, customers, and employers at the same time,” Joe Johal said.
One regulator noted the fast-food industry is faced with unique challenges.
“The industry is being singled out and attacked in some ways. Ultimately, the small business owner is being hurt,” said council member SG Ellison, who is also the CEO of the Diversified Restaurant Group.
“It’s a complicated matter.”
