FAT Brands Inc.—the multi-brand restaurant operator that owns Pretzelmaker, Twin Peaks, and other popular fast-food chain brands—warned that California's minimum wage increase could lead to serious price hikes.
On Tuesday, Feb. 6, FAT Brands Chairman Andy Wierderhorn said that when the minimum wage in the state of California increases, then fast-food products will also become expensive.
He said this during a The Big Money Show episode. Wierderhorn also blamed Californian voters who support the new minimum wage increase legislation.
FAT Brands Says California's Minimum Wage Increase Could Lead to Price Hikes
Andy Wiederhorn explained the consequences of making the new minimum wage increase law in California fully implemented.
"The consumers who are voters must have known what they were getting into by promoting this legislation to raise the minimum wage from 15 to $20 and on its way to $25," said the FAT Brands chairman via Fox Business.
He added that what everyone wants, which is to increase the salaries of employees, could cost them greatly.
"And someone's got to pay for it. And the restaurant operators don't have the margin for that. So prices are going to go up," he added.
In September 2023, California Gov. Gavin Newsom signed into law Assembly Bill No. 1228 (AB 1228), which replaced the FAST Recovery Act.
This new legislation aims to require fast-food companies to pay their employees $20 per hour. It is just one of the provisions that the newly formed Fast Food Council will administer.
Consequences of California's Minimum Wage Increase
According to Business Insider's latest report, AB 1228 will be implemented as early as April. This was thanks to the successful deal between the restaurant industry and labor unions.
Although the upcoming law will exempt some restaurants, California's residents would still suffer from food price hikes since popular fast-food companies will mostly be affected.
These include McDonald's, Jack In The Box, and Chipotle. They already confirmed that they will raise their prices at California stores to compensate for the extra labor cost.
California's new law states that restaurants that have 60 or more locations across the United States will be affected. The new minimum wage requirement is expected to cost an extra $250,000 annually for each affected restaurant.
To learn more about the new Californian legislation, you can click this link.
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