STATESIDE
On April 1, California enacted a new $20 minimum wage for quick service restaurants (QSRs), or fast-food eateries, with 60 or more outlets. Those that operate on-site bakeries or sell bread as a stand-alone menu item are exempt.
States often legislate raising the minimum wage incrementally at the new year, but California’s action only exacerbates its astronomical cost of living.
Newsom and restaurant union workers held a splashy media press conference but ultimately ignored the calculated risks. As food supply prices, utilities, labor and other built-in costs skyrocketed, profits collapsed. The blowback happened within months. To fund these increases, fast-food outlets quickly raised their prices. Already inflated because of uncertain economics, foot traffic declined. The very people who frequent these locations are those who probably can least afford dramatic price hikes. Dining habits changed during Covid and the QSR demographic has had to tighten its collective money belt.
Analytics research firm
placer.ai recently released a study about dining venues. The report revealed price increase percentages from the mid-single digits to mid-teens. While foot traffic in California during February and March surpassed the national average over 2023, it declined below the national average in seven of eight weeks during April and May. There is a clear correlation between the new minimum wage and consumer spending.
Rubio’s, a popular California fast-food group, has already filed for bankruptcy. The 40-year-old operation closed 48 sites statewide-13 in San Diego County. Its remaining 86 stores in Nevada, Arizona and California will remain open.
There are 15 casinos with a San Diego post office address. Are the other 35 closures throughout California near, or operating in, casinos too? How much revenue will these see from hundreds of their communities’ workers laid off? It is not
claims most of California’s burger chains have suffered the most. Burger King, Wendy’s, Jack in the Box and In-N-Out Burger raised its prices 6-7 percent statewide to offset the wage increases. Numerous burger outlets do business at California gaming properties. Ironically, the demographic that patronizes casual dining chains like Olive Garden and Chili’s surpassed national averages in April. Most already paid employees $20-plus an hour. Customers already expected higher prices, but Olive Garden just announced another menu price increase.
only the employees themselves, but everyone connected to its operation. So, if you were laid off, how often would you dine out, see a show or place a bet? Casinos may lose customers throughout their buildings.
Many of California’s casinos won’t escape this probable fate. Why? How many locations have food courts with fast-food operations? Plenty, because they are easily recognizable to local and out-of-town consumers.
The QSRs may initially survive, but if their parent companies face serious financial troubles, how long can they hold on before having to exit their outlets? Will the casinos be able to replace that empty space? McDonald’s is the poster child of this disaster. California accounts for nine percent of its U.S. restaurants and kept pace with nationwide averages prior to April 1. Since then, they have underperformed by 2.5 percent. After more than 30 years, a suburban San Francisco McDonald’s franchise just closed its doors.
That is one prominent example.
Placer.ai
I expect fallout. This only proves that no matter the proposals and legislation, every possible repercussion must be carefully considered, especially when dealing with money and employment. Generating more revenue in one corner may leave the opposite corner in bad shape. The solution is to develop a realistic balance.
Sharon Harris
Sharon has worked in the casino and coin- operated amusement industries since the 1980s. In the early 1990s, Sharon transferred her public relations and journalism skills to the gaming International predecessor EUROSLOT magazine in 1994.
International, Sharon has chronicled the explosive growth of U.S. gaming and reported on its most traveled across America to participate in dozens of industry events and has interviewed
hundreds of gaming operators,
executives and suppliers.
BMM qp strip CI
Jun24.indd 1
JULY 2024 13
19/6/24 09:49
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