California’s Minimum Wage Hike Forces Popular Restaurant to Halt Lunch Service

This change is attributed to the rising minimum wage laws in California. As of April, California mandates a $20/hour wage for employees at fast-food chains with over 60 locations nationally. The state’s minimum wage has also increased to $16/hour. Though Moonstone Bistro isn’t directly affected by the fast-food law, the overall impact of these wage increases has influenced their decision.

Despite the lesser profitability of the lunch service, this decision was crucial for the financial health of their business. Che Stedman emphasized the importance of being able to hire staff, stating, “We want to be able to hire people,” as reported by KRCR.

With fast-food chains offering $20/hour, he finds it challenging to compete for both experienced and inexperienced cooks. Speaking to KRCR, he pointed out the disparity in wage expectations, questioning, “If you can make $20/hour at Taco Bell, with no experience, how much money do you think I’m going to have to pay a cook, who actually has experience?”

His plea is for a system that encourages rather than impedes small businesses. “Make that path easier. Make it less expensive, make it more simple, streamline it. Instead of putting roadblocks in front of it, open it up. Guide people,” Che articulated during his interview with KRCR.

In response, Che emphasized the foundational role they play in their business’s existence. He stated to KRCR, “Tanya and I are the reason why this business exists, not the opposite.” He further highlighted the importance of their work and its contribution to job creation.

Che articulated the feeling of being unfairly blamed for broader economic issues, saying, “We, as business owners, do not feel that we are the ones exploiting people. We pay huge taxes, fees, licenses, inspections, Workman’s Comp, insurance, you name it.”

Che highlighted the necessity of this decision, stating, “For us, we cannot accept more liability and expense. We have to pay our rent, too,” he told KRCR.

Despite the current challenges, their commitment to their restaurant and its clientele remains strong. They continue to focus on delivering exceptional culinary experiences, particularly through their dinner service.

The dinner service has consistently been the driving force behind the restaurant’s popularity and will remain its central offering.

However, they assure their commitment to maintaining the high quality of the restaurant’s dinner service during this transition period. Their focus remains on ensuring the restaurant’s ongoing success.

These challenges highlight the delicate balance small business owners must maintain between profitability and fair employee compensation, especially in the current economic climate.

It is an example of the complexities and decisions that come with running a small business in a changing economic environment.

However, he notes to ABC7, “It’s definitely the case that prices will increase; what is surprising is that they’re not going to increase nearly as much as a lot of the commentators like to think.” 

He emphasizes that historically, about 20 percent of minimum wage increases are reflected in consumer prices, a trend consistent for decades.

For instance, a $7 Big Mac would then cost approximately $7.42. 

David Smith, a professor at Pepperdine University, estimates that “up to 50,000 jobs could be lost.”

Speaking to  ABC7, he states “You might have longer lines, you might have dirtier dirty restaurants, there is even a study from Seattle when they raised the minimum wage hygiene violations increased.” 

Despite having another job, he expressed concern to ABC30, for his colleagues who might struggle without this income, highlighting the personal impact of these changes on individuals and families.

ABC30 reports that these changes are expected to begin in mid-February.

He told Business Insider, “I feel that there will be a lot of pain to workers as franchise owners are forced to take drastic measures.” 

In anticipation of this change, Walberg is expecting to increase menu prices by a further 8-10% at his restaurants, following an 8% increase last year, as reported by Business Insider.

He told Business Insider, “We’re not hiring new people to fill jobs. We’re being very tight on schedules,” indicating a strategy of reducing labor costs through controlled scheduling and workforce management.

Business Insider reports that Major chains like McDonald’s and Chipotle have announced price increases, and Pizza Hut announced that all delivery drivers in California were going to be laid off. 

This period of adjustment will be crucial in determining the long-term effects of the minimum wage increase on both the industry and its consumers.