‘Increase Prices or Close’: Minimum Wage Hike Stalls Growth for California Restaurant Owners

By: Georgia | Published: Apr 23, 2024

In the heart of Los Angeles, a $20 minimum wage law could be the knockout punch for small restaurants like HiFi Kitchen. 

Owner Justin Foronda, after barely surviving the pandemic, faces a new challenge that could close his doors for good.

Beyond Big Chains

Though aimed at fast-food giants, California’s wage hike law hits closer to home for local favorites

Nighttime view of a small restaurant's interior seen through a window; a neon 'OPEN' sign glows in vibrant red and blue colors above the window, while two workers are visible inside, one cooking and another attending the counter

Source: Khachik Simonian/Unsplash

These establishments are caught in the crossfire, struggling to match the salary standards without the backing of a corporate giant.


A Creative Fight to Stay Open

From hosting Filipino markets to initiating board game nights, Foronda has thrown everything into keeping HiFi Kitchen buzzing, Fox News reports.

A restaurant worker in a black t-shirt and blue gloves smiles while standing behind stacks of pre-packed food containers, with kitchen equipment and utensils visible in the background

Source: HiFi Kitchen/Facebook

It’s not just about serving food; it’s about creating a community hub in Filipinotown.

Double Duty

To keep his restaurant afloat, Foronda isn’t just a restaurateur; he’s also a weekend nurse. 

Two customers sit at a high table inside HiFi Kitchen, eating and chatting, with a view to the street outside; the restaurant's interior is casually styled with a colorful graphic wall featuring music and food icons

Source: HiFi Kitchen/Facebook

This dual role illustrates the dire situation faced by many small business owners who are doing whatever it takes to survive.

Racing Against the Tide

With the new wage law in effect, Foronda likens his struggle to “playing Mario Kart, and we’re just always trying to make it to that boost.” 

A person's hand holding a clear plastic cup filled with a yellow-orange beverage, branded with the HiFi Kitchen logo, with a graphic design in the background

Source: HiFi Kitchen/Facebook

A fitting metaphor for the constant battle to stay ahead amid rising costs.

The Unintended Victims

Despite not directly falling under the new wage law, Foronda and similar small business owners feel its ripple effects. 

A wooden serving board holds a hearty sandwich with meat and vegetables, accompanied by a side of pickled vegetables and a drink from HiFi Kitchen, set against a black and white checkered background

Source: HiFi Kitchen/Facebook

Rising wages force them to reconsider their financial strategies just to keep pace.


A Wider Impact

Not limited to wage issues, small restaurants also grapple with inflating food costs and escalating rent, Fox News notes.

A close-up of a vintage-inspired 'Yes, we are OPEN' sign hanging on a glass door, with a blurred background of a warmly lit restaurant interior with hanging fairy lights

Source: Artem Beliaikin/Unsplash

It’s a triple threat that leaves little room for error—or profit.


A Dire Prediction

Echoing Foronda’s concerns, celebrity chef Andrew Gruel points out the irony of the wage hike. 

A bearded man in a light blue shirt, attentively listening or speaking at a public event, with a microphone in front of him and a black background behind

Source: Wikimedia Commons

Intended to make big corporations pay up, it might instead cripple the very workers it aims to help.


The Domino Effect

According to Gruel, large chains might absorb the cost by cutting hours or jobs.

A hand-written sign on a glass door reading 'SORRY WE ARE NOW CLOSED' in bold, black letters on a yellow background, taped up with four pieces of duct tape

Source: Tim Mossholder/Unsplash

While smaller establishments must raise prices or shut down—a stark choice with far-reaching consequences.


By Proxy

The new law might not mandate small restaurants to up their wages to $20.

A candid shot of a bustling restaurant interior with patrons dining, servers attending to tables, and copper pendant lights hanging above wooden tables

Source: Lexie Barnhorn/Unsplash

However, the industry’s competitive landscape forces them to elevate pay scales regardless, putting immense pressure on their operational budgets. 


Automation Isn't an Option

For many small businesses, automation to offset labor costs isn’t feasible. 

Inside a fast food restaurant with self-order kiosks available for customers, featuring digital screens and signs prompting to 'ORDER YOUR WAY', with the service counter in the background

Source: Wikimedia Commons

They lack the capital to invest in technology, leaving them with tougher decisions on pricing and service models.


Price Increases or Closure

As the wage increase unfolds, small establishments face a grim choice: “They’re either going to have to increase their prices or close,” says Gruel. 

Overhead view of four people sharing a meal, hands reaching for burgers and fries on white plates, with drinks and condiments on the table, embodying a communal dining experience

Source: Dan Gold/Unsplash

It’s a harsh reality check for those trying to navigate the restaurant industry in California.