Last year in February I published an article “The law of unintended – or is it intended? – consequences coming to a restaurant near you,” in which I argued that the new California law taking effect in April 2024, requiring fast-food chain restaurants to start paying a minimum of $20 an hour ($41,760 a year plus benefits), would affect adversely both consumers and restaurateurs alike:
Consumers, especially from disadvantaged communities who frequent these fast-food restaurants, will be one of the biggest losers since the restaurants will have to increase prices to accommodate this minimum wage increase.
Restauranteurs of any size will be affected negatively as well by this new rule: if the McDonald’s nearby is paying $20/hour, what should your restaurant pay to retain employees? Prices at these restaurants will go up as well, in addition to the nearly 30% price increases since the start of the pandemic, which means that they will lose customers and revenues as well.
Fast forward to today: a new study by The Berkeley Research Group discovered that there were 10,700 fast-food job losses in California between June 2023 and June 2024 in the sector, (Bureau of Labor Statistics data), and prices at the establishments soared by 14.5% after the new minimum wage became law.
Fast-food restaurant jobs are starter jobs. Jobs for high-schoolers, college students, young people in-between jobs. Summer jobs. Jobs to teach you of discipline, teamwork, time management, responsibilities, traits you will need throughout your life.
But… a fast-food restaurant job is not a life-long career choice. Not meant to provide living ages to adults in their 30s, 40s, 50s. And indeed, the average fast food worker age is 23 years old. I guess Californian politicians did not know that.
So how are fast-food restauranteurs, licensees and franchisees handling the new minimum wage law?
California fast food restaurants increased automation and technology adoption to offset rising labor costs, the Berkeley Research study released Feb. 18 stated.
The food and beverage industry in the US installed 25% more F&B robots last year, according to a robotics report by IRF. Many robotics companies, like Miso Robotics, Bear Robotics, Keenon, Peanut Robotics, Kitchen Robotics, Hyper Food Robotics, have seen huge spikes in inquiries for their robots due to labor shortages and new minimum wage hikes like the one in California.
McDonald’s, Dominos, Macdonald’s, Sweetgreen and other fast-food chains are already testing fully robotic restaurants.
Next time, when you visit a California fast-food restaurant, the chance is you will meet more robotic than human workers.
The law of unintended – or is it intended? – consequences coming to a restaurant near you. | By Max Starkov
