I moved to Los Angeles in high school and worked in my parents’ 7-Eleven. After seeing how franchising provided an opportunity for immigrants like us to pursue small business ownership and make a life in California, my wife and I began saving and eventually had enough to buy our first Subway restaurant in 1993. We worked there 24/7, and it was wonderful.
Owning and operating a local restaurant is both rewarding and difficult, but this spring and summer has been especially hard due to a new state law that unfairly singled out tens of thousands of family-owned local restaurants like ours with a minimum wage hike to $20/hour for fast food workers – a massive 25 percent overnight increase.
As small business owners, we value our employees, but this massive wage hike added hundreds of thousands of dollars annually to local restaurant owners’ costs.
A July 2024 survey of California franchisees impacted by the new $20/hour minimum wage found that 67 percent of franchisees said it will cost their restaurant at least $100,000 per restaurant, and 26 percent said it will cost more than $200,000 per restaurant.
To cope, almost every local restaurant owner has been forced to do some combination of raising food prices, laying off employees, or cutting employee hours to stay afloat.
The price hikes have resulted in lower customer traffic, even in summer, the busiest time of year for restaurants. I, along with other operators, am worried about what’s going to happen this fall and winter when customer traffic drops.
If that weren’t enough, the Los Angeles City Council is considering a new unjustified and costly restaurant ordinance that would unfairly target our industry – once again. Piling additional cost burdens on local restaurant owners in LA, while we’re still struggling to adapt to the $20/hour minimum wage, will only exacerbate our challenges.
The LA ordinance pushes for significantly higher mandatory paid time off requirements for quick service restaurants, on top of the five sick days already required by state law. It mandates duplicative, unnecessary and costly trainings for our employees, despite extensive training requirements that already exist for our industry. Finally, the ordinance institutes new restrictive scheduling requirements that limit our employees’ flexibility.
These new regulations would add tens of thousands of dollars more in costs per quarter. Our already narrow margins cannot survive the additional burden. As a result, more quick service restaurants will be wiped out along with the jobs that go with them.
I already closed one of my restaurants due to the $20/hour wage hike. I felt awful about letting my employees go, but I couldn’t afford to keep my doors open.
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At the restaurants I’m trying to keep open, I’m forced to reduce workers’ hours so I can keep them employed while also managing costs. I’ve raised prices at my restaurants by 3 to 4 percent – the highest I felt I could go – and I’ve seen a big drop off in customers. Customers who do come are spending less.
But this may not be enough. Two of my LA restaurants do not have the customer traffic to consistently cover expenses, so I may be forced to close them, too.
Other brands have made similar tough decisions. In June, Rubio’s Coastal Grill closed 48 restaurants in California. Pizza Hut laid off more than 1,100 of its delivery drivers last December in anticipation of the April 1 increase. Media reports confirm workers who still have jobs are working fewer hours.
If the LA City Council cares about small businesses and jobs, they’ll see that franchisees are struggling. They must reject this unnecessary and costly restaurant ordinance.
Sumer Suri and his wife Archana own five Subway franchised restaurants in the City of Los Angeles.