Wendy’s, Jersey Mike’s franchise owners slash hours, jobs to offset labor costs from California’s new $20 minimum wage

Wendy’s and Jersey Mike’s franchise owners in California have cut hours and slashed jobs to offset the spike in labor costs caused by the state’s new $20 minimum wage.

Lawrence Cheng, who operates seven Wendy’s franchises in Southern California with his family, has not only chopped hours but has also stepped in to fill shifts at his burger joints, he said.

“I schedule one less person, and then I come in for that time that I didn’t schedule and I work that hour,” Cheng told the Associated Press.

At his Wendy’s in Fountain Valley, located in Orange County, he has reduced staffing to seven workers for the afternoon shifts, compared with around a dozen before the state raised the minimum wage to $20 from $16.

Cheng has also limited overtime pay, but said he does not plan to lay off any of his 250 employees. 

That’s not the case for Jersey’s Mike’s owner Juancarlos Chacon, who runs nine locations in Los Angeles. The higher minimum wage, which went into effect in April, has forced him to slash 20 part-time staffers, from 165 to 145 — as well as reduce staff hours.

He has also had to raise the price of menu items — something that many of his fast food rivals at McDonalds, Wendy’s, Burger and In-N-Out have also done.

“I’ve been in the business for 25 years and two different brands and I never had to increase the amount of pricing that I did this past time in April,” Chacon told the Associated Press.

Cheng raised the prices at his Wendy’s location by about 8% in January in anticipation of the higher labor costs from the law signed by California Gov. Gavin Newsom.

“When labor costs jump more than 25% overnight, any restaurant business with already-thin margins will be forced to reduce expenses elsewhere,” said Jot Condie, president and CEO of the California Restaurant Association, which opposed the bill.

“They don’t have a lot of options beyond increasing prices, reducing hours of operation, or scaling back the size of their workforce.”

The new law has also led some beloved chains, like Rubio’s California Grill, to shutter dozens of locations in the state because of higher labor costs, as The Post previously reported.

Newsom has argued the pay bump was necessary to provide a living wage to the more than half a million fast food workers in California. 

Fast food restaurants in the state added 8,000 jobs in the first two months after the law took effect compared to the same period in 2023, according to the US Bureau of Labor Statistics.

No figures were available yet for June.

“Multiple franchisees have noted that the higher wage is already attracting better job candidates, thus reducing turnover,” said Joseph Bryant, executive vice president of the Service Employees International Union.

With Post Wires