Their Pleasure: Legislators Cook Up A Law That Burns Fast Food


Iconic California burger joint In-N-Out is not closing any of its restaurants due to the state’s higher fast-food industry minimum wage (though it shuttered an Oakland location due to crime), but its prices have gone up. Company president Lynsi Snyder said she resisted the increases, telling other executives that “we can’t raise the prices that much, we can’t.” But she could hold on only for so long.

The new prices, which won’t go up in other states, depend on where the restaurant is.  A double-double meal combo at San Francisco’s Fisherman’s Wharf now costs $13.63 including taxes; not far away in Daly City, the same meal is $2 cheaper, says the New York Post. In Irvine, near In-N-Out headquarters, the double-double meal combo is still less than $11, but for customers who have been used to paying less than $10 – it was never an exaggeration to call it the best deal in town, only four years ago that order was only $7.95 before taxes – it can be a bit of a shock.

The lawmakers behind the minimum wage, which jumped 25% on April 1, from $16 an hour to $20 an hour, don’t care, though, about Snyder’s dilemma or the headaches their legislation is causing. All businesses can do is respond as best as they are able.

For some, this means shutting their doors because they can’t afford to pay the higher-than-market wages the government says they must.

Rubio’s Coastal Grill, for instance, “abruptly” closed 48 restaurants in California, “more than a third of its already slimmed-down chain of 134 restaurants,” the Los Angeles Times reports. The company statement “attributed the closings to the rising cost of doing business” in the state.

UCLA economics professor and Hoover Institution senior fellow Lee Ohanian, who called his first fish taco from Rubio’s a “game changer,” figures “these closures destroyed about 1,250 jobs, since the average Rubio’s restaurant employs about 26 workers.”

While it “did not elaborate” on the reasons behind the closures, the Times notes “the move came two months after the state’s $20 an hour minimum wage took effect for fast-food employees.”

Not all Rubio’s California locations will close, though. Maybe those still open have a profit margin large enough to absorb the higher labor costs – until the government raises wages again.

The California Business and Industrial Alliance reckons that nearly 10,000 fast-food jobs have been lost since the legislation that set the minimum-wage hike, Assembly Bill 1228, was signed last fall. In addition to the Rubio’s closings, the organization lists in a full-page ad in the June 6 USA Today several other restaurant chains “that have been forced to raise prices, lay off workers, and shut down stores.” A few of the big names include McDonald’s, Pizza Hut, El Pollo Loco, Burger King and Subway, which has been undergoing a downsizing that is likely to continue as the chain deals with the new California minimum wage.

The ad is topped off by a banner that reads “In Memoriam: Victims of Newsom’s minimum wage.” Naturally, the governor’s office has disputed the number. And if it’s right and the correct figure is 5,000 or only 1,000 – it has to be at least 1,250, doesn’t it? – that still doesn’t justify lawmakers killing jobs as a favor to organized labor, which benefits because a higher minimum wage pushes up union wages and protects “their economic flanks.”

How many more jobs will have to be lost before policymakers admit they’ve been wrong not only this time but every time they’ve raised the wage floor? How many robots at the grill and self-ordering kiosks that flash rising prices will they have to see before they realize that the laws of economics are rigid? At what point will anyone feel they’ve violated a private company’s right to manage its business without government interference?

There are so many policy changes needed in California that it’s impossible to know where to begin. But repealing the minimum wage would have to be among the first 10 or 12.

Kerry Jackson is the William Clement Fellow in California Reform at the Pacific Research Institute.


Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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