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

By: Georgia | Published: Jan 28, 2024

According to news outlet KRCR, Moonstone Bistro, a well-known fine-dining establishment in Redding, CA, has decided to discontinue their lunch offerings.

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.

Strategic Decision to Maintain Staffing Levels

Owners Che and Tanya Stedman have opted to end lunch services at Moonstone Bistro. This move is part of a strategy to protect their profit margins and avoid laying off any of their 16 employees.

Advertisement
An intimate restaurant interior at night, featuring a neatly set table with multiple wine glasses reflecting the warm ambient lighting

Source: Chan Walrus/Pexels

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.

The Dilemma of Competing Wages in the Restaurant Industry

Che Stedman, the executive chef and owner of Moonstone Bistro, has expressed concern over the rising wage demands in the industry.

Advertisement
A person is being served an elegantly plated dish in a bustling restaurant setting, with a focus on a white plate holding a delicately arranged entree, topped with a sprig of green

Source: Jay Wennington/Unsplash

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?”

Advocacy for Simpler Entrepreneurial Processes

Amidst these challenges, Che Stedman has called for a more supportive approach from California legislators towards entrepreneurship. He suggests simplifying the process and reducing the costs for small business owners.

Advertisement
A waiter in a white shirt and black apron holds a large white plate with a fresh salad topped with slices of cucumber, tomato, and onion, alongside a smaller plate with bruschetta topped with tomatoes and green herbs

Source: Pixabay/Pexels

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.

Addressing the Perception of Undervaluing Workers

The Stedmans have faced questions about whether reducing services undervalues the work of minimum wage employees.

Advertisement
A close-up view of a waitstaff's hand pouring rosé from a bottle into a tall wine glass, against the backdrop of a restaurant with patrons seated at tables

Source: Mika Baumeister/Unsplash

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.

The Burden of Business Ownership

Che Stedman also expressed to KRCR the difficulties faced by business owners like himself. He listed the various expenses they incur, including taxes, licenses, and insurance.

A woman in a casual white jacket sips from a glass of wine, her expression serene amidst the bustling atmosphere of a crowded restaurant. Another woman, seated across from her, appears engaged in conversation

Source: Andrea Piacquadio/Pexels

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.”

Advertisement

Focusing on Profitable Services for Business Stability

Moonstone Bistro’s decision to stop lunch service is a strategic move to reduce costs and liabilities. This focus shift aims to ensure the restaurant’s stability and success amidst growing economic pressures.

A chef, focused intently on the careful preparation of dishes, works at a counter in an open kitchen setting. Patrons seated at the bar watch the culinary process, with one diner in mid-conversation

Source: Sofia Lyu/Unsplash

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.

Advertisement

A Longstanding Commitment to Culinary Excellence

KRCR reports that the Stedmans have been running Moonstone Bistro for 18 years, demonstrating a long-term dedication to providing quality dining experiences.

Two chefs in a bustling professional kitchen work meticulously on appetizers. The male chef in the foreground focuses on seasoning dishes, while the female chef arranges a platter of oysters

Source: Elle Hughes/Pexels

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.

Advertisement

Dinner Service: The Core of Moonstone Bistro

KRCR explains that throughout the years, dinner has been the mainstay of Moonstone Bistro’s success. This focus will continue, regardless of whether the Stedmans or new owners are in charge.

An overhead shot captures the elegant ambiance of a high-end restaurant, where waiters in white shirts serve patrons seated at tables adorned with crisp white linens

Source: K8/Unsplash

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

Advertisement

Moonstone Bistro Is Up for Sale

For the past two years, the Stedmans have had Moonstone Bistro listed for sale, indicating their openness to new ventures, as reported by KRCR.

A chef's hands are meticulously garnishing dishes in a restaurant kitchen, focusing on adding final touches to plates lined up under bright lights. The chef, wearing a black uniform with red trim, is placing a piece of meat onto a plate

Source: Fabrizio Magoni/Unsplash

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.

Advertisement

Broader Implications for Small Businesses

The situation at Moonstone Bistro sheds light on the wider impact of minimum wage laws on small businesses.

A cheerful male waiter wearing an apron is presenting a tray of burgers and fries to a group of happy customers seated at a wooden table in a cozy restaurant with a bar in the background

Source: Drazen Zigic/Freepik

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

Advertisement

Reflecting on the Small Business Landscape

Moonstone Bistro’s story is a reflection of the realities faced by small business owners today.

A chef in a professional kitchen is carefully drizzling sauce from a stainless steel pot onto plates of fish entrees

Source: Sebastian Coman Photography/Unsplash

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

Advertisement

Anticipating the Price Impact of Minimum Wage Increase

Professor Orley Ashenfelter, an economist at Princeton University, predicts an inevitable rise in prices due to the minimum wage increase. 

A customer is entering their PIN on a handheld card payment machine to pay a bill, held by a waiter wearing a white shirt

Source: Freepik

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.” 

Advertisement

Understanding Price Increases Through Historical Data

Professor Ashenfelter provides a historical context, stating to ABC7, “If the wage goes up by 10 percent, the price goes up by two percent. This is not a projection, this is based on the facts on the history.” 

A young male waiter in a white shirt is handing over a card payment device to a seated female customer with blonde hair

Source: Freepik

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

Advertisement

Specific Projections for Fast-Food Price Increases

Applying this formula to a hypothetical wage increase from $15.50 to $20, Professor Ashenfelter suggests to ABC7 that a resulting six percent increase in product prices. 

An individual's hand is seen reaching for a French fry on a plate next to a Big Mac box from McDonald's, on a wooden table strewn with various items including a yellow bag, a phone charger, and a pair of glasses

Source: Annie Spratt/Unsplash

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

Advertisement

Job Loss Concerns Amid Wage Hikes

The rise in minimum wage may lead to substantial job losses in the state of California, as per ABC7.

Kitchen staff in red uniforms are busily preparing burgers in a fast food restaurant kitchen. The image shows a focused employee in the foreground assembling burgers with various toppings

Source: Marcel Heil/Unsplash

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

Advertisement

Potential Operational Changes in Fast-Food Industry

Professor Neumark from UIC points out possible operational consequences of this change. 

A close-up view of a fast food meal on a table, featuring a burger wrapped in foil and a basket of fries. A bottle of Corona Extra beer and a water bottle are placed next to the food

Source: Eliška Doležalová/Unsplash

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.” 

Advertisement

Real-Life Impact on Employees

This issue has already affected employees at a South Valley Pizza Hut location, where delivery drivers, including Marvin William Lopez Rangel, received letters of separation. Rangel, who has been with the company for five years, attributes his layoff to the minimum wage increase. 

A row of red Pizza Hut delivery scooters parked side by side, featuring the company's branding. The scooters are equipped with black insulated delivery boxes mounted on the back

Source: Wikimedia Commons

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.

Advertisement

Pizza Hut's Response to Minimum Wage Increase

In response to the wage increase, local Pizza Hut chains, which are independently owned, have begun implementing cutbacks, including layoffs. 

A traditional Pizza Hut restaurant with a distinctive red roof and brick exterior. The building features the iconic Pizza Hut sign on both the roof and the standalone signage next to the street

Source: Wikimedia Commons

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

Advertisement

Rising Costs at LA Restaurants

Marcus Walberg, who owns four Fatburger franchises in Los Angeles, has responded to the minimum wage increase by raising menu prices and reducing employee hours. 

A vibrant neon sign illuminating the words "OPEN Fatburger 24 HOURS" in bold red against a dark night sky

Source: Wikimedia Commons

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.” 

Advertisement

The Impact of California's Minimum Wage Law

The AB 1228 law was proposed in response to the rising cost of living and the high percentage of fast-food workers living at or below the federal poverty line. 

A man and woman seated at a restaurant table, preparing to share a gourmet burger. The woman, wearing a yellow blouse, holds a fork while the man in a light blue shirt uses a knife to cut the burger. On the wooden serving board, there is a basket of fries and a small bowl of ketchup alongside the burger

Source: Drazen Zigic/Freepik

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.

Advertisement

Cost-Cutting Measures at Fatburger

In addition to raising prices, Walberg is taking further steps to mitigate the financial impact of the wage increase. 

Inside a Fatburger restaurant, featuring bright neon signs that read "FATBURGER" and "THE LAST GREAT HAMBURGER STAND" with an additional sign indicating "OPEN 24 HOURS." Below, the menu boards display various food options

Source: Wikimedia Commons

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.

Advertisement

Statewide Changes in the Fast Food Industry

The fast-food industry across California is undergoing significant changes due to the minimum wage increase. 

A McDonald's restaurant captured at dusk with a pink and orange sky in the background. The prominent golden arches sign states "24 Hours" above the "McCafé" logo, indicating the restaurant is open all day

Source: Boshoku/Unsplash

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. 

Advertisement

The Future of Fast Food in the Wake of Wage Increases

Businesses in the food industry are adapting to the new minimum wage laws. These changes involve difficult decisions regarding pricing, staffing, and service quality. 

Staff members at an In-N-Out Burger restaurant are seen wearing red and white uniforms with the company's logo, working behind the counter. They are wearing face masks while attending to various tasks

Source: Qi Li/Unsplash

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.

Advertisement