A major California McDonald’s franchisee is speaking out against Gov. Gavin Newsom’s (D-CA) new minimum wage law that will force fast food businesses to pay workers at least $20 per hour, saying menu items would become “unaffordable” if scaled to the increased wages.
Kerri Harper-Howie, a Los Angeles-based franchisee who owns 21 McDonald’s locations across the state with her sister, says her profits will tank while trying to keep up with the guidelines from the California Fast Food Council, which Newsom created in 2023.
Harper-Howie, who employs more than 1,000 people across the state, told KTLA 5 that Assembly Bill 1228 does not make economic sense for workers or business owners.
“We, as business owners, are not opposed to minimum wage increases,” she explained, with the outlet noting that many of her restaurants are located in low-income cities, such as Compton and Inglewood.
“One of our primary objections is that this wage increase only applies to us,” she continued. “Why isn’t everyone getting an increase if, fundamentally, [the current] wage is not adequate for people to live? Who then are the customers that are going to be able to afford to pay for the food?”
The $20 minimum, set to go into effect on April 1, is a 25 percent jump from the state’s current minimum wage. The Fast Food Council even has the ability to raise it by up to 3.5 percent each year, according to Business Insider.
Raising menu prices is “not the only thing that we’re doing because the truth of the matter is, you can’t raise prices enough,” Harper-Howie said.
“It would be unaffordable.”
The business owner went on to explain that there are other cost-saving methods she can do “behind the scenes,” but at the end of the day, “we will take less…[which] means less profitability for us, and we will absorb that.”
The progressive bill received Democrat support in the California Assembly before Newsom signed it in September 2023. Newsom touted it as a policy that would “ensure these workers receive the fair pay they deserve.”
While the legislation applies to “limited-service restaurant chains with at least 60 restaurants nationally,” it still includes franchisees who own fewer than that number of locations, Insider reports.
A franchisee for California-based chain Fatburger previously complained to the outlet that he had to cut employees’ hours and vacation time and raise prices by about eight to ten percent at his four restaurants to offset the law’s financial impact.