Friday, May 30, 2014

Fast Food Restaurant Expansion -- Ain't Happenin' With Minimum Wages Rising To $15/Hour

See this earlier post on same subject, Connecticut's experience.

I do a lot of long distance driving; I love fast-food restaurants. I have also spent a lot of time in California (and go back twice/year). One of the first fast-food restaurants I first saw when I moved to Los Angeles 30 or 40 years ago was Carl's Jr. I always wondered why I never saw new ones going up in southern California. I assume "In 'N Out" was part of the reason, but so is the story being reported by CNBC below.

CNBC is reporting via Yahoo!Finance is reporting:
CKE Restaurants' roots began in California roughly seven decades ago, but you won't see the parent company of Carl's Jr. and Hardee's expanding there much anymore.

What's causing what company CEO Andy Puzder describes as "very little growth" in the state?
In part it's because "the minimum wage is so high so it's harder to come up with profitable business models," Puzder said in an interview. The state's minimum wage is set to rise to $9 in July, making it among the nation's highest, and $10 by January 2016.
That's as far as I've read ... so far. Let's see if the 800-pound gorilla in the room is mentioned?

Yup, there it is, a bit farther down:
ObamaCare regulations, which impact businesses with 50 or more workers more than those with fewer employees, are also affecting CKE's franchise growth.
"I actually have franchisees...who've either gotten out of the business or refused to build two restaurants because with one restaurant you have less than 50 employees," he said. "With two, you have more than 50."
Instead, some cautious franchisees are considering alternatives to expanding their businesses.
Apparently at least one group of Chicago aldermen want to minimize entry-level jobs and even minimize new fast-food outlets by proposing a $15/hour minimum wage.  But Seattle appears to be beating Chicago to its own no-growth program; a Seattle city council committee voted for a $15/hour minimum wage and now the entire city council will decide.

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