'I plan on fighting,' says McDonald's owner as law change forces sudden price increases – after costs rose 7% in 8 weeks | VW02YN9 | 2024-04-24 17:08:01
A MCDONALD'S owner has been fighting to keep his businesses afloat after the new law forces major changes.
Scott Rodrick, who owns multiple McDonald's franchises admits that California's new wage laws have added new financial pressures to the business.
"This is my family's 50th year in the McDonald's business, and I plan on fighting and surviving for another 50 years," he told Fox Business.
Since April 1, California now requires fast food franchises to pay workers $20 an hour, as part of the state's new minimum wage laws.
The law was introduced and passed last fall by Gavin Newsom.
Under the new law, chain restaurants with 60 or more franchises worldwide and limited to no table service must comply with the new salary.
The new wage adjustment has caused many owners to switch their business plans including reducing employee hours or hiking menu prices.
"California restaurants across the quick service sector are bracing for the fast-food wage hike and the tough scheduling, staffing, and pricing decisions they are forced to confront," the California Restaurant Association said in a statement sent to NRN last month.
"We are already seeing the cost pressures cascade throughout the restaurant industry and, indeed, beyond.
"Unfortunately, these challenges exasperate an already fragile small business operating environment, forcing entrepreneurs – of every stripe – to make decisions that stymie employment growth opportunities."
McDonald's CEO Chris Kempczinski previously revealed that the company would have to raise its prices after news broke out about the new law.
<!-- End of Brightcove Player --> "Certainly, there's going to be some element of that that does need to be worked through with higher pricing," Kempczinski said in an earnings call last November, The Wall Street Journal reported.
"There's also going to be things that I know the franchisees and our teams there are going to be looking at around productivity.
"How all of that plays out, there will certainly be a hit in the short term to franchisee cash flow in California; tough to know exactly what that hit will be because of some of the mitigation efforts."
Since January, Rodrick has taken the advice of the CEO and has increased the menu prices by 5% to 7%.
However, he believes he will have to raise it more from there.
"The focus is survival," he stated.
IN-N-OUT FIGHTS BACK
While McDonald's is looking to increase their prices, In-N-Out hopes keep its menu at a stable price.
"I was sitting in VP meetings going to toe-to-toe, saying, 'We can't raise the prices that much. We can't,'" said President of In-N-Out Lynsi Synder, while talking to Today.
"Because I feel such an obligation to look out for our customers."
Snyder claims that she's disinterested in price hikes, despite the new wage laws affecting California.
"When everyone else was taking these jumps, we weren't," she said.
In one location in California, In-N-Out raised the price of their burger by 25 cents and drinks by a nickel, according to the New York Post.
More >> https://ift.tt/8uaiAMh Source: MAG NEWS