The owner of a fast food franchise store in business for more than 30 years has closed his restaurant for good.
The McDonald’s branch in Stonestown Galleria, about eight miles south of downtown San Francisco, abruptly closed Sunday, the latest trigger for California’s new $20-an-hour minimum wage.
Employees saw their wages increase from $16 to $20 an hour on January 1, but the extra costs for owners to pay their workers have hit businesses hard.
Fast food chains across the state have been cutting jobs as a way to cut costs, but franchisee Scott Rodrick was forced to take drastic action after the landlord was unwilling to negotiate a long-term lease at a ‘sensible’ price for the place.
Rodrick also explained that property taxes and shared tenant fees at the mall were also the highest paid for a single location for the company. He saw no choice but to close.
San Francisco McDonald’s owner Scott Rodrick is closing his restaurant Sunday after more than 30 years, partially blaming the hike in the minimum wage to $20 an hour
Rodrick also explained that property taxes and shared tenant mall fees were also the highest paid for a single location for the company, as a secondary reason for its closure.
“This is a heartbreaking day for my family,” Rodrick said ABC7.
All of Rodrick’s employees have been offered jobs at other nearby McDonald’s, with the vast majority of them able to remain with the company.
“It has been a pleasure for my entire team and me to serve the 19th Avenue and Ingleside neighborhoods for over thirty years,” Rodrick wrote in a note taped to the door at closing.
“All of our valued team members have been offered the opportunity to continue working at my restaurant company or at another nearby McDonald’s,” Rodrick added.
Nearly 10,000 jobs at chains from Pizza Hut to Burger King have been cut since the higher minimum wage took effect April 1, according to a report from a state trade group.
Rodrick posted a heartfelt letter at the front door of the franchise thanking customers for their business
In some cases, chains have been forced to increase their menu prices.
Wendy’s, Burger King, Starbucks and Chipotle have increased the cost of their offerings in the Golden State by as much as 8 percent.
In addition, chains have closed restaurants, including beloved Mexican chain Rubio’s Coastal Grill, which filed for Chapter 11 bankruptcy earlier this month and closed 48 locations across the state.
Last week, Arby’s Roast Beef, a fixture on Sunset Boulevard in Hollywood for 55 years, closed its doors
“Inflation has caused food costs to rise significantly and the $20 per hour minimum wage is the nail in the coffin,” CEO Gary Husch told the newspaper. Los Angeles Times.
Arby’s Roast Beef, a fixture on Sunset Boulevard in Hollywood for 55 years
The California Business and Industrial Alliance (CABIA) blasted Governor Gavin Newsom for pushing through the law, which also meant businesses in the state would have to raise prices.
To raise awareness of the law’s impact, the trade group even created a newspaper ad featuring fake “obituaries” of popular brands.
Even before the law was made official earlier this year, chains like Pizza Hut and Round Table let go of more than a thousand delivery drivers to brace for the financial impact of the change.
The law that Newsom signed last September raises the minimum wage for fast food workers to $20 an hour at chains with more than 60 locations in the US.
That’s 25 percent more than California’s standard minimum wage of $16 an hour, which itself went into effect in January.
At the national level, Congress hasn’t touched the minimum wage in decades; it is still $7.25 per hour. Instead, so-called “wage wars” are playing out at the state level.
“California businesses have been targeted and attacked for years,” said Tom Manzo, president and founder of CABIA Fox Business.
“It’s just another law that further puts businesses at risk.”
He said civil servants are living in a “fantasy land” if they think drastic pay increases will actually help workers or businesses.
“You can only raise prices so much,” Manzo told the outlet. ‘And you see it. People aren’t going to pay $20 for a Big Mac. It’s not going to happen.’
To highlight the law’s impact, the trade group placed a fake ad in the USA Today edition on Thursday featuring fake “obituaries” of popular brands.
When the Democratic governor signed the bill into law in 2023, Newsom said the state was “one step closer to fairer wages, safer and healthier working conditions and better training by giving hardworking fast-food workers a stronger voice and a seat at the table.”
But Republican critics argued that the wage increase would simply mean replacing workers with self-checkouts and “robot chefs.”
Harsh Ghai, a Burger King franchisee with 140 restaurants on the West Coast, announced in April that he plans to have digital kiosks installed at all of his locations within two months.
Until the pay increase, he planned to roll it out over the next five to 10 years.
“We have kiosks in about 25 percent of our restaurants today,” Ghai told Business Insider at the time.
“However, the remaining 75 percent will have kiosks in the next 30 to 60 days.”