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Here's what we learned about California's wage increase after one quarter

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Here's what we learned about California's wage increase after one quarter


The second quarter was an important litmus test for restaurant operators with a footprint in California, as it marked the first reporting period following the state’s implementation of AB 1228 on April 1. The law raised the minimum wage at quick-service restaurants to $20 an hour, or by 25%.

The legislation initially raised some hell in the industry, to put things lightly. Some companies blamed the hike for layoffs, others for closures. Some operators vowed not to include California in their expansion plans. For public companies, however, the reaction has been a bit more measured. In summary, it’s full speed ahead in California, a state that is experiencing population growth for the first time in three years. But, it’s full speed ahead with significant price increases to offset the labor inflation, and those price increases have impacted traffic at many, if not most, concepts. According to Revenue Management Solutions, traffic in California has declined by 5.9% since January versus the U.S. average of negative 3.6%.

RMS’ data finds that menu prices in California have risen over four percentage points more than the U.S. average since January, or 7.5% compared to 3.1%. Domino’s, Shake Shack, and Chipotle are three such companies that took high-single-digital pricing increases in the state following the implementation of AB 1228.

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Labor optimization

In addition to taking pricing, several chains are sharpening their focus on “labor optimization” to offset wage inflation. California-based The Habit Burger Grill is one of them.

“… A comprehensive store level labor optimization effort … contributed to an impressive 520 basis point expansion of restaurant level margins from the first quarter, despite a double-digit increase in restaurant level labor rates in California stores,” David Gibbs, CEO of parent company Yum Brands, said during his company’s earnings call earlier this month.

El Pollo Loco, which has a massive footprint in California, is exploring “labor productivity initiatives,” like deployment and scheduling, in addition to increased menu prices. CFO Ira Fils said traffic in California was “a little more” down compared to other markets, but overall, “we didn’t see a whole lot of difference between the markets.”

Sweetgreen is also making improvements to its labor optimization, according to CFO Mitch Reback, while Portillo’s is testing kiosks in the California market.

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QSRs hit

Of course, QSRs have beared the brunt of this inflation and executives acknowledged as much during their respective Q2 calls. McDonald’s chief financial officer Ian Borden simply called wage pressures in California “a headwind we’re working through,” adding that margins could be “down a little bit” from 2023 accordingly, but still good considering the “overall context of what we’re working through.” McDonald’s experienced its first negative same-store sales quarter since 2020.

As for Wendy’s, CEO Kirk Tanner called California “unfortunate from a wage and labor standpoint,” adding that the company is focused on “driving more productivity.”

“If you look at where consumers are, our focus is on winning and competing well in this environment. And we’re doing that with that strategy, including places like California. It goes to delivering our core, having compelling innovation and having relevant value,” Tanner said. Wendy’s sales were essentially flat in Q2.

Jack in the Box felt a swift impact, with labor costs up 200 basis points from the prior year, while franchise-level margin was $74.6 million, compared to $75.3 million a year ago. CEO Darin Harris said the chain will “regain” its margin through improved sales, and “ongoing equipment, technology, and financial fundamentals initiatives.” The chain has adopted a new oil management process, for instance, and is in the process of testing a fryer automation system, while its sister chain, Del Taco, is testing kiosks. Jack in the Box also worked with its franchisees to take a “surgical approach” to pricing. Despite the early hit on margins and sales, executives remain optimistic about California.

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“California fared substantially better than we thought,” CEO Darin Harris said.

“This was the first full quarter of operating under the increased minimum wage law and we are proud of how our teams executed through this change,” CFO Brian Scott said. “[For] Jack in the Box company-owned restaurants, which are predominantly in California, same-store sales performance was better than all but one market. Del Taco had a similar result, with California being one of their top markets in the quarter.”

Full-service insulated?

Despite the law only applying to QSRs, full-service wasn’t completely insulated. Consider Kura Sushi as an example here. The company’s second quarter performance fell well short of expectations, with chief executive officer Hajime Jimmy Uba citing AB 1228 as a main culprit given that comparable same-store sales decelerated in California in April.

“What we have seen … is a general perception that restaurants as a category have become expensive, introducing industry-wide pressures regardless of a given restaurant’s relative value,” he said.

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Still, many full-service concepts have experienced no change at all, or even a small tailwind from the QSR-focused legislation. For example, Texas Roadhouse’s handful of California stores are doing “fine,” according to executives.

BJ’s Restaurants, which is headquartered in Huntington Beach, Calif., also hasn’t seen changing trends from its consumers, perhaps because gas prices have come down, according to chief financial officer Tom Houdek. BJ’s executives made it a point to also note that labor levels haven’t been impacted by higher wages at QSRs and that the company is “in a better place” than in 2019 with staffing. That said, Houdek called the statewide pricing increases a “sticker shock” for consumers.

Denny’s has leaned into a silver lining from California’s wage increases, expanding its virtual Banda Burrito brand to over 300 restaurants with a priority on the state to add the revenue channel. CEO Kelli Valade said traffic outperformed QSRs during the quarter because of lower menu prices relative to QSRs, as well as the expansion of Banda Burrito. Notably, Denny’s is also targeting California as one of its growth markets for its Keke’s brand.

“We have not experienced a material increase in team wages at our 22 California company restaurants as a result of AB 1228. We believe this is in part due to our servers earning well above the AB 1228 minimum wage when factoring in tip income,” CFO Robert Verostek said, adding,The [market share] gap we were experiencing to overall QSR, we’ve cut in half in California specifically.”

Cheesecake Factory is also seeing consistency across its geographies with no added pressure from California. CEO David Overton said the legislation mostly impacts QSRs, “which is positive for us.”

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Notably, full-service brands aren’t the only ones with optimism. Wingstop had a meteoric second quarter relative to the rest of the industry, AB 1228 be damned. Wingstop did not experience transaction changes after implementing pricing increases to offset wage increases at its 400-ish California locations.

“In fact, the trends in California are following a very similar trend to what we see outside of California for our business,” CFO Alex Kaleida said.

Further, Dutch Bros experienced a 60-basis-point year-over-year increase in labor costs primarily driven by the wage increase in California, where about 20% of its system is located. The company took a 1.5% pricing increase to help offset the pressure but has otherwise been focused on business as usual.

“We had two of our top first week performers in California in the first half of this year,” CEO Christine Barone said. “We continue to be very bullish on our prospects in California and continue to look for sites and opening shops in California.”

Contact Alicia Kelso at [email protected]

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California lawmaker introduces bill to protect wildlife from euthanasia, create coexistence program

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California lawmaker introduces bill to protect wildlife from euthanasia, create coexistence program


A Southern California state senator has proposed a new law that would prevent euthanasia in the state’s wildlife just a month after a mother bear was put down for swiping at a woman in Monrovia, feet away from where her two cubs were located. 

The legislation, SB 1135, which was introduced by Sen. Catherine Blakespear (D-Encinitas), calls for the establishment of a state program that promotes the coexistence with wildlife and codifies a wolf-livestock coexistence and compensation program. The move comes two years after funding for a similar wildlife coexistence program expired. 

“We can and must responsibly support people and wild animals to exist in a California where we are all under growing pressures and cumulative threats like extreme heat, frequent drought and intense wildfires that animals respond to by moving in search of resources to survive,” Sen. Blakespear said in a statement. “That means investing in science-based, situation-specific, proactive strategies to minimize negative interactions and prevent escalation to conflicts that pose risks for people and animals. SB 1135 proposes a program to better protect people, wildlife and communities.”

Blondie, the mother bear that was euthanized in March after it swiped at a woman in Monrovia.

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Neighbor Photo


The proposed coexistence program, which would be allocated nearly $50 million through the state’s 2026-27 budget, would build on the previous version, which deployed trained regional human-wildlife conflict staff around the state. The absence was noted by CDFW leaders during a state Assembly meeting in January, according to Blakespear. 

“Over the last five years, wildlife incident reports logged by the California Department of Fish and Wildlife (CDFW) increased by 31 percent and calls, emails and field contacts rose by 58 percent,” Blakespear’s proposal says. 

She noted the recent headline across the state, including “Blondie,” the Monrovia mother bear who was captured and put down by wildlife officials in March after it swiped at a woman near the home it was living under with its two cubs

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The home in question belongs to Richard Franco. He, along with many other Monrovia residents, has documented his encounters with bears over the years, even setting up a system of trail cameras to track the bears’ movements. 

“Getting to know her, you could see what a devoted mother she was,” Franco said. “She was always building a nest.”

Read more: Orphaned bear cubs taken to San Diego for care after mom is euthanized for attacking people

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One of the two bear cubs captured by California Department of Fish and Wildlife officials in Monrovia on Sunday, March 15, 2026.

CBS LA

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Franco and many of his neighbors were angered upon learning that CDFW officials had euthanized Blondie after her capture, which they credited to the fact that she had swiped at the woman days earlier and another person in 2025.

“Forcing them out, and then euthanizing the mom was just traumatic for us,” said one Monrovia couple. “It was just tragic, and there was no need for it; it was completely unnecessary.”

Situations like this are what caught Blakespear’s attention, leading to her proposal last week. 

“It is really my desire to make sure that wild places stay wild, and not be having to resort to lethal measures like killing bears or killing wolves,” Blakespear said, while speaking with CBS LA. “We need to have a program that is up and going so we can be educating people.”

The program calls for focus on public education, maintaining a statewide incident reporting system and deploying devices like barriers, noise and light machines and other technology that would deter predators from places where they shouldn’t be. 

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SB 1135 passed on a 5-1 vote and will now be considered by the Senate Appropriations Committee. 



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480 ducks find homes after an emergency rescue operation in Riverside County

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480 ducks find homes after an emergency rescue operation in Riverside County


Only a week after animal services officials in Riverside County discovered 480 ducks living in crowded, outdoor cages, all of the ducks have been adopted, the result of a what authorities are describing as a massive “teamwork and coordination” effort.

The Riverside County Department of Animal Services found the ducks Tuesday after investigating overcrowding conditions at a property in unincorporated Riverside County, according to the agency. The birds were taken to the San Jacinto Valley Animal Campus, where officials urgently called on the public and rescue organizations to help place them beginning Wednesday.

According to a social media update from the San Jacinto Valley Animal Campus, all 480 ducks have been rescued or adopted, marking one of the largest single intake-and-placement efforts for the department in over a decade.

“This large-scale operation required extensive teamwork and coordination across our department,” Riverside County officials said in the social media update.

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Animal service officials were not available to explain who had adopted the animals and whether they were adopted as pets or food. But Daniel Markichevich told KABC that he and his fiancée Savannah Burgardt visited the San Jacinto shelter on Wednesday and planned on adopting 20 ducks for their San Jacinto property.

“We have a 3.5-acre farm, so they will just go right into the area and enjoy, and we’ll get out there and look at them, eat their eggs and have a whole full life for them,” said Markichevich, who recently completed construction on a pond in their backyard.

An animal sanctuary in Vacaville, dubbed the Funky Chicken Rescue, took in eight of the ducks, according to a social media post.

Officials said the original owner of the ducks had intended to create a sanctuary for the animals but animal control officers ultimately determined that conditions required intervention, citing improper husbandry and concerns about the number of birds being housed.

Before taking in the ducks, the animal services agency coordinated with the California Department of Food and Agriculture to test a sample of the ducks for zoonotic diseases, according to the county. All results came back negative but early assessments indicated the birds had not received adequate care, according to authorities.

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“Overcrowding can contribute to stress and decreased immune function,” Itzel Vizcarra, chief veterinarian for the county animal services agency, said in a statement. “Inadequate nutrition, particularly vitamin A deficiency, can impair the lining of the digestive tract, predisposing birds to inflammation and secondary illness.”

The swift placement effort was supported in part by community donations, including more than 70 bags of waterfowl feed provided by a local business, according to the San Jacinto Valley Animal Campus.

While the ducks now have new homes, officials said the investigation into overcrowding conditions at the original property is ongoing.



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California couple charged with murder in death of toddler skip court

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California couple charged with murder in death of toddler skip court


A Bay Area couple charged in the murder of a 2-year-old girl who reportedly overdosed on fentanyl earlier this year failed to appear in court last week to face the charges.

The tragic incident occurred just after 5 a.m. on Feb. 12, according to the San Francisco County District Attorney’s Office.

Officers with the San Francisco Police Department responded to an apartment in the 3800 block of 18th Street, near Mission Dolores Park, after receiving a 911 call reporting that a child was not breathing.

“Medics arrived at the location and pronounced the two-year-old child deceased,” the DA’s office said in a news release. “Medics observed signs of rigor mortis and lividity, indicating the child had been dead for several hours.”

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A woman and her boyfriend in San Francisco have been charged with second-degree murder in the fatal overdose death of a 2-year-old girl on Feb. 12, 2026. (Google Maps)

Responding officers noted that Michelle Price, 38, the girl’s mother, was slurring her speech and had “an emotionless demeanor,” according to court documents. Investigators also observed drug paraphernalia in the apartment, including three pipes, lighters and torches, a used Narcan container, white powder ultimately identified as fentanyl, bottles of spoiled milk and stained sheets on the bed.

Price was arrested for child endangerment.

Her boyfriend, Steve Ramirez, 43, allegedly attempted to flee the apartment on a bicycle, leading police on a chase during which an officer was injured. At the time of his arrest, Ramirez was reportedly in possession of a pipe inside a bag on his bike. Two additional pipes with burnt residue were also found nearby, investigators said.

Blood samples taken from Price and Ramirez at the time of their arrests showed high levels of methamphetamine and fentanyl in their systems, according to the DA’s office.

An autopsy performed by the San Francisco Medical Examiner’s Office revealed no obvious signs of physical injury to the toddler. However, toxicology testing showed lethal levels of fentanyl, as well as naloxone, commonly known as Narcan, in the child’s bloodstream.

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“The cause of death was determined to be acute fentanyl poisoning,” the release stated.

Price was initially charged with felony child endangerment, possession of fentanyl and possession of drug paraphernalia. Ramirez faced the same charges, along with an additional count of resisting, obstructing and delaying a peace officer.

Over the objections of prosecutors, both Price and Ramirez were allowed to remain out of custody ahead of their arraignments.

The overdose-reversal drug Narcan was reportedly found to have been used on a 2-year-old girl in San Francisco who died from a fentanyl overdose prior to police arriving at the apartment.(AP Photo/Matt Rourke, File)

On April 15, San Francisco District Attorney Brooke Jenkins announced an amended complaint charging the couple with second-degree murder, marking the first time such charges have been brought in a fatal fentanyl overdose case in the county.

“There wasn’t really anywhere safe for this child to be inside of this home,” Jenkins said during a press conference announcing the charges. “This is a moment in time where people have to realize that we take these situations very seriously and where, I believe, parents who knowingly possess fentanyl, who understand its lethality and the danger it poses, allow their children to be exposed to it, this is something that can come with respect to accountability if a child dies.”

At the April 16 arraignment, where both defendants failed to appear, Price’s attorney told the court she may have experienced transportation issues. An attorney representing Ramirez said he did not know his client’s whereabouts, according to KTLA’s Bay Area sister station KRON.

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While both attorneys said the couple was mourning the loss of the child and struggling with addiction, Ramirez’s lawyer accused the district attorney’s office of turning the case into a media circus, claiming the publicity caused his client to panic.

The judge subsequently issued bench warrants for both Price and Ramirez. It remains unclear whether either has since been taken into custody.



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