Dive Brief:

• Fifty-one percent of California restaurant owners surveyed by Homebase for its Owner Pulse Survey said they are concerned that the FAST Recovery Act will drive up food costs and increase menu pricing.
• The report, which was emailed to Restaurant Dive, also revealed that 40% of operators are afraid they will lose workers to a QSR that could pay employees more. 
• California passed the FAST Recovery Act during the summer, authorizing a council that would regulate wages and working conditions for fast food workers.

Dive Insight:

The bill, which Gov. Gavin Newsom signed into law in September, has become a growing concern for many across the restaurant industry. The National Restaurant Association and International Franchise Association created a coalition to back a referendum initiative that would repeal the law. The coalition, “Save Local Restaurants,” has also spurred McDonald’s, Starbucks, Chipotle and other restaurant groups to raise $12.7 million to try and overturn the law by referendum. Many expect the California council would raise the minimum wage for fast food workers to as high as $22 next year. 

Restaurants have expressed concerns the law could increase costs and make it more difficult for franchises and brands already experiencing issues with inflation, which has forced some chains to increase menu prices. Sustained menu price hikes could reduce the value pricing that many customers rely on at fast food chains, franchisees told Restaurant Dive. 

Almost one-third of restaurant owners said they are also concerned the new law will result in cuts to their workforces, while 21% said they think it could lead to more automated operations. Only 28% of operators didn’t express concern over the law, according to Homebase’s survey.