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Restaurants are reacting to AB1228 with labor changes


Last week, we talked about the tech takeaways from the Restaurant Leadership Conference. Today, executive editor Alicia Kelso is joining us to talk about her takeaways.

The main takeaway is labor. There was a lot of discussion about labor and wages against the backdrop of California’s AB1228 which went into effect earlier this month, raising the minimum wage to $20 an hour. One operator told Alicia he’ll “never” expand in California again, while another felt confident about the combined pricing and technology strategies her team has put into place to soften the inflationary blow. We’ve seen plenty of stories so far about layoffs and kiosk implementations and even menu adjustments to navigate these higher wages, but time will tell how it ultimately shakes out. Will this $20 watermark trickle beyond QSRs? Likely. Other markets? Maybe. Will California’s restaurant growth stagnate a bit? Perhaps among smaller players, but not likely among the bigger players who have the advantages of scale to absorb the higher costs.  

The industry had a major reckoning during the pandemic and ensuing labor shortage that caused companies to re-think their employee propositions and these executives noted those propositions are now about more than just wages, but also benefits, training and development, culture/buy-in. It requires ownership across the business (not just HR) and also investment, but there is a return when retention rates rise. The executives also noted that the employee proposition should lead with their experience – is their job satisfying, purposeful, as simple and safe as it can be? Happier employees equal happier customers.

TAGS: Workforce
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