Latest news with #FASTAct
Yahoo
02-05-2025
- Business
- Yahoo
One year in, California's fast food wage hike brings higher pay, debatable job numbers
Edgar Recinos no longer has to choose between paying rent and buying groceries. As a cook at a Wingstop restaurant in Los Angeles, Recinos got a significant wage bump last year — one of half a million fast food workers taking part in a great labor experiment. California passed the Fast Food Accountability and Standards Recovery (FAST) Act in April of 2024 amid vocal support and fierce opposition. The first-of-its-kind policy increased the starting wage for California fast food workers to $20 per hour, which is higher than the overall state minimum wage. It also established a statewide council that sets wage and safety standards at fast food restaurants with more than 60 locations nationwide, like McDonald's, Jack in the Box, Burger King and Subway. But one year later, the initial impact is a mixed bag. Economists are divided over the effect on employment. Workers do earn more, but many complain their hours have been cut. Fast food restaurant owners tell CNN they have been trimming employee hours and instituting hiring freezes to offset the cost of higher wages. Recinos, like many, says his regular hours have been cut. When he doesn't get to fill in to make up the time, he finds himself 'in the same situation before the (wage) increase.' As of March, employment at California's limited-service restaurants fell 3.1% from the year before, according to the St. Louis Federal Reserve using seasonally adjusted data from the Bureau of Labor Statistics. That's more than 22,600 jobs lost at fast food restaurants that both did and did not fall under the policy. While that drop is in line with losses in the broader leisure and hospitably sector in the state, it's a more pronounced downswing than the national trend for fast food restaurants, BLS data shows. Economists are clashing over whether the $20 wage is to blame. Christopher Thornberg of Beacon Economics, who published a two-page commentary about the sector's losses in March, wrote the findings 'undercut much of the recent analysis released by pro-labor groups which have been claiming that the Fast Act has had little impact on (the) limited-service restaurant industry in California.' While Thornberg told CNN it's premature to determine if the FAST Act is to blame for the job losses, he is seeing signs of negative cost. 'There is no such thing as a costless policy,' he said. 'Every part, every policy must, by definition, have some cost. And it's up to society to figure out if that trade-off is worth it, right?' But Michael Reich, chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley, told CNN there is no evidence the FAST Act is at the root of any job loss. Reich did his own analysis of the data, comparing jobs at California's large fast food chains to those in states where the minimum wage did not change, as well as California's full-service restaurants and smaller fast food chains not subject to the policy. He says he found 'no significant negative employment effect.' Instead, he points to California's population loss and slower economic growth compared to other states among the factors influencing job number fluctuations. 'If there are more people, there is going to be more demand for fast food. The different population growth is not because of minimum wage,' Reich said. 'So, if you don't control for that, you're looking at a correlation. That's not a causation.' California fast food workers are now the highest paid in the nation. Pay for impacted workers jumped 8% to 9% on average since April 2024, according to Reich. They also earn more than other Californians making minimum wage at $16.50 per hour. That kind of money has been life-changing for Selvin Martinez, who works at a Weinerschnitzel in San Jose. 'Before the wage increase, I struggled to keep up with expenses. I limited my purchases. I limited what I ate,' Martinez said through an interpreter. 'I have been able to cover all of my bills, help my family financially, my savings have grown, and I'm thankful to God, because life feels easier now that I'm not as worried financially.' Management did, however, shift the opening of Martinez's restaurant one hour later, cutting his weekly schedule shorter by a few hours. He's not alone. Some workers tell CNN they now work fewer hours. It's a hard metric to track as economists say there is no reliable data on work hours in fast food. But Recinos, who got a pay bump from $17.25 to $20 in April 2024, says he remembers working more back then. Recinos now works about 20 hours a week at Wingstop but fights to get more time on the schedule. He pads his hours by filling in for absent co-workers or during higher-demand periods like the Super Bowl. Recinos said managers blame the shorter hours on labor costs. 'It makes no sense. Because if you are cutting hours to your current workers, why are you hiring new people and blaming the increase of the wage?' he said. The Wingstop management where Recinos works told CNN they use a standard labor matrix to schedule employees based on business volume and location. Management added that it's not related to the FAST Act, and they're committed to providing a consistent schedule and paycheck for their employees. While the policy has helped some in the workforce, some owners face a different picture. Kerri Harper-Howie says she's had to dip into long-term savings for her 40-year-old family business to keep it afloat, with the account down 30% in just nine months. 'We have literally been like, 'Do we need to leave California?'' Harper-Howie said. The daughter of a social worker and a police officer, Harper-Howie watched her parents buy their first McDonald's franchise location in Los Angeles in 1984. Since then, she and her sister have grown the family business into 24 locations in Los Angeles County. Harper-Howie says sales growth has declined in every single McDonald's location they own since the FAST Act went into effect — something that has never occurred in the family's four decades in the industry. As a result of lower sales, Harper-Howie says they've streamlined job duties for employees and cut about 170,000 labor hours. She hasn't laid anyone off but just lifted a hiring freeze that was in place for the past year. 'We put (a supervisor) in charge of going to every restaurant and doing a food cost analysis. Are we giving out too many ketchups? Are we putting too much, too many squirts on the Big Mac?' Harper-Howie said. She also had to increase prices to offset costs. That's caused employees at neighboring businesses who earn a lower wage to buy less food. Fast food menu prices in California rose by 1.9% relative to the increases in other states over the first six months of the policy, Reich said. Sales are only now beginning to turn around for Harper-Howie due to a McDonald's partnership with 'The Minecraft Movie' for toys. 'The Minecraft Movie' is distributed by Warner Bros. Pictures, a subsidiary of Warner Bros. Discovery, the parent company of CNN. Harper-Howie said her family will continue the business fueled on hope. 'Not 'hope' in like the 'racetrack hope,' but hope rooted in the fact that our family has weathered storms for 40 years,' she said. 'I do firmly believe in our brand. I love our brand, and so I'm just hopeful that something is going to get better.' Sign in to access your portfolio
CNN
02-05-2025
- Business
- CNN
One year in, California's fast food wage hike brings higher pay, debatable job numbers
Edgar Recinos no longer has to choose between paying rent and buying groceries. As a cook at a Wingstop restaurant in Los Angeles, Recinos got a significant wage bump last year — one of half a million fast food workers taking part in a great labor experiment. California passed the Fast Food Accountability and Standards Recovery (FAST) Act in April of 2024 amid vocal support and fierce opposition. The first-of-its-kind policy increased the starting wage for California fast food workers to $20 per hour, which is higher than the overall state minimum wage. It also established a statewide council that sets wage and safety standards at fast food restaurants with more than 60 locations nationwide, like McDonald's, Jack in the Box, Burger King and Subway. But one year later, the initial impact is a mixed bag. Economists are divided over the effect on employment. Workers do earn more, but many complain their hours have been cut. Fast food restaurant owners tell CNN they have been trimming employee hours and instituting hiring freezes to offset the cost of higher wages. Recinos, like many, says his regular hours have been cut. When he doesn't get to fill in to make up the time, he finds himself 'in the same situation before the (wage) increase.' As of March, employment at California's limited-service restaurants fell 3.1% from the year before, according to the St. Louis Federal Reserve using seasonally adjusted data from the Bureau of Labor Statistics. That's more than 22,600 jobs lost at fast food restaurants that both did and did not fall under the policy. While that drop is in line with losses in the broader leisure and hospitably sector in the state, it's a more pronounced downswing than the national trend for fast food restaurants, BLS data shows. Economists are clashing over whether the $20 wage is to blame. Christopher Thornberg of Beacon Economics, who published a two-page commentary about the sector's losses in March, wrote the findings 'undercut much of the recent analysis released by pro-labor groups which have been claiming that the Fast Act has had little impact on (the) limited-service restaurant industry in California.' While Thornberg told CNN it's premature to determine if the FAST Act is to blame for the job losses, he is seeing signs of negative cost. 'There is no such thing as a costless policy,' he said. 'Every part, every policy must, by definition, have some cost. And it's up to society to figure out if that trade-off is worth it, right?' But Michael Reich, chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley, told CNN there is no evidence the FAST Act is at the root of any job loss. Reich did his own analysis of the data, comparing jobs at California's large fast food chains to those in states where the minimum wage did not change, as well as California's full-service restaurants and smaller fast food chains not subject to the policy. He says he found 'no significant negative employment effect.' Instead, he points to California's population loss and slower economic growth compared to other states among the factors influencing job number fluctuations. 'If there are more people, there is going to be more demand for fast food. The different population growth is not because of minimum wage,' Reich said. 'So, if you don't control for that, you're looking at a correlation. That's not a causation.' California fast food workers are now the highest paid in the nation. Pay for impacted workers jumped 8% to 9% on average since April 2024, according to Reich. They also earn more than other Californians making minimum wage at $16.50 per hour. That kind of money has been life-changing for Selvin Martinez, who works at a Weinerschnitzel in San Jose. 'Before the wage increase, I struggled to keep up with expenses. I limited my purchases. I limited what I ate,' Martinez said through an interpreter. 'I have been able to cover all of my bills, help my family financially, my savings have grown, and I'm thankful to God, because life feels easier now that I'm not as worried financially.' Management did, however, shift the opening of Martinez's restaurant one hour later, cutting his weekly schedule shorter by a few hours. He's not alone. Some workers tell CNN they now work fewer hours. It's a hard metric to track as economists say there is no reliable data on work hours in fast food. But Recinos, who got a pay bump from $17.25 to $20 in April 2024, says he remembers working more back then. Recinos now works about 20 hours a week at Wingstop but fights to get more time on the schedule. He pads his hours by filling in for absent co-workers or during higher-demand periods like the Super Bowl. Recinos said managers blame the shorter hours on labor costs. 'It makes no sense. Because if you are cutting hours to your current workers, why are you hiring new people and blaming the increase of the wage?' he said. The Wingstop management where Recinos works told CNN they use a standard labor matrix to schedule employees based on business volume and location. Management added that it's not related to the FAST Act, and they're committed to providing a consistent schedule and paycheck for their employees. While the policy has helped some in the workforce, some owners face a different picture. Kerri Harper-Howie says she's had to dip into long-term savings for her 40-year-old family business to keep it afloat, with the account down 30% in just nine months. 'We have literally been like, 'Do we need to leave California?'' Harper-Howie said. The daughter of a social worker and a police officer, Harper-Howie watched her parents buy their first McDonald's franchise location in Los Angeles in 1984. Since then, she and her sister have grown the family business into 24 locations in Los Angeles County. Harper-Howie says sales growth has declined in every single McDonald's location they own since the FAST Act went into effect — something that has never occurred in the family's four decades in the industry. As a result of lower sales, Harper-Howie says they've streamlined job duties for employees and cut about 170,000 labor hours. She hasn't laid anyone off but just lifted a hiring freeze that was in place for the past year. 'We put (a supervisor) in charge of going to every restaurant and doing a food cost analysis. Are we giving out too many ketchups? Are we putting too much, too many squirts on the Big Mac?' Harper-Howie said. She also had to increase prices to offset costs. That's caused employees at neighboring businesses who earn a lower wage to buy less food. Fast food menu prices in California rose by 1.9% relative to the increases in other states over the first six months of the policy, Reich said. Sales are only now beginning to turn around for Harper-Howie due to a McDonald's partnership with 'The Minecraft Movie' for toys. 'The Minecraft Movie' is distributed by Warner Bros. Pictures, a subsidiary of Warner Bros. Discovery, the parent company of CNN. Harper-Howie said her family will continue the business fueled on hope. 'Not 'hope' in like the 'racetrack hope,' but hope rooted in the fact that our family has weathered storms for 40 years,' she said. 'I do firmly believe in our brand. I love our brand, and so I'm just hopeful that something is going to get better.'
CNN
02-05-2025
- Business
- CNN
One year in, California's fast food wage hike brings higher pay, debatable job numbers
Edgar Recinos no longer has to choose between paying rent and buying groceries. As a cook at a Wingstop restaurant in Los Angeles, Recinos got a significant wage bump last year — one of half a million fast food workers taking part in a great labor experiment. California passed the Fast Food Accountability and Standards Recovery (FAST) Act in April of 2024 amid vocal support and fierce opposition. The first-of-its-kind policy increased the starting wage for California fast food workers to $20 per hour, which is higher than the overall state minimum wage. It also established a statewide council that sets wage and safety standards at fast food restaurants with more than 60 locations nationwide, like McDonald's, Jack in the Box, Burger King and Subway. But one year later, the initial impact is a mixed bag. Economists are divided over the effect on employment. Workers do earn more, but many complain their hours have been cut. Fast food restaurant owners tell CNN they have been trimming employee hours and instituting hiring freezes to offset the cost of higher wages. Recinos, like many, says his regular hours have been cut. When he doesn't get to fill in to make up the time, he finds himself 'in the same situation before the (wage) increase.' As of March, employment at California's limited-service restaurants fell 3.1% from the year before, according to the St. Louis Federal Reserve using seasonally adjusted data from the Bureau of Labor Statistics. That's more than 22,600 jobs lost at fast food restaurants that both did and did not fall under the policy. While that drop is in line with losses in the broader leisure and hospitably sector in the state, it's a more pronounced downswing than the national trend for fast food restaurants, BLS data shows. Economists are clashing over whether the $20 wage is to blame. Christopher Thornberg of Beacon Economics, who published a two-page commentary about the sector's losses in March, wrote the findings 'undercut much of the recent analysis released by pro-labor groups which have been claiming that the Fast Act has had little impact on (the) limited-service restaurant industry in California.' While Thornberg told CNN it's premature to determine if the FAST Act is to blame for the job losses, he is seeing signs of negative cost. 'There is no such thing as a costless policy,' he said. 'Every part, every policy must, by definition, have some cost. And it's up to society to figure out if that trade-off is worth it, right?' But Michael Reich, chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley, told CNN there is no evidence the FAST Act is at the root of any job loss. Reich did his own analysis of the data, comparing jobs at California's large fast food chains to those in states where the minimum wage did not change, as well as California's full-service restaurants and smaller fast food chains not subject to the policy. He says he found 'no significant negative employment effect.' Instead, he points to California's population loss and slower economic growth compared to other states among the factors influencing job number fluctuations. 'If there are more people, there is going to be more demand for fast food. The different population growth is not because of minimum wage,' Reich said. 'So, if you don't control for that, you're looking at a correlation. That's not a causation.' California fast food workers are now the highest paid in the nation. Pay for impacted workers jumped 8% to 9% on average since April 2024, according to Reich. They also earn more than other Californians making minimum wage at $16.50 per hour. That kind of money has been life-changing for Selvin Martinez, who works at a Weinerschnitzel in San Jose. 'Before the wage increase, I struggled to keep up with expenses. I limited my purchases. I limited what I ate,' Martinez said through an interpreter. 'I have been able to cover all of my bills, help my family financially, my savings have grown, and I'm thankful to God, because life feels easier now that I'm not as worried financially.' Management did, however, shift the opening of Martinez's restaurant one hour later, cutting his weekly schedule shorter by a few hours. He's not alone. Some workers tell CNN they now work fewer hours. It's a hard metric to track as economists say there is no reliable data on work hours in fast food. But Recinos, who got a pay bump from $17.25 to $20 in April 2024, says he remembers working more back then. Recinos now works about 20 hours a week at Wingstop but fights to get more time on the schedule. He pads his hours by filling in for absent co-workers or during higher-demand periods like the Super Bowl. Recinos said managers blame the shorter hours on labor costs. 'It makes no sense. Because if you are cutting hours to your current workers, why are you hiring new people and blaming the increase of the wage?' he said. The Wingstop management where Recinos works told CNN they use a standard labor matrix to schedule employees based on business volume and location. Management added that it's not related to the FAST Act, and they're committed to providing a consistent schedule and paycheck for their employees. While the policy has helped some in the workforce, some owners face a different picture. Kerri Harper-Howie says she's had to dip into long-term savings for her 40-year-old family business to keep it afloat, with the account down 30% in just nine months. 'We have literally been like, 'Do we need to leave California?'' Harper-Howie said. The daughter of a social worker and a police officer, Harper-Howie watched her parents buy their first McDonald's franchise location in Los Angeles in 1984. Since then, she and her sister have grown the family business into 24 locations in Los Angeles County. Harper-Howie says sales growth has declined in every single McDonald's location they own since the FAST Act went into effect — something that has never occurred in the family's four decades in the industry. As a result of lower sales, Harper-Howie says they've streamlined job duties for employees and cut about 170,000 labor hours. She hasn't laid anyone off but just lifted a hiring freeze that was in place for the past year. 'We put (a supervisor) in charge of going to every restaurant and doing a food cost analysis. Are we giving out too many ketchups? Are we putting too much, too many squirts on the Big Mac?' Harper-Howie said. She also had to increase prices to offset costs. That's caused employees at neighboring businesses who earn a lower wage to buy less food. Fast food menu prices in California rose by 1.9% relative to the increases in other states over the first six months of the policy, Reich said. Sales are only now beginning to turn around for Harper-Howie due to a McDonald's partnership with 'The Minecraft Movie' for toys. 'The Minecraft Movie' is distributed by Warner Bros. Pictures, a subsidiary of Warner Bros. Discovery, the parent company of CNN. Harper-Howie said her family will continue the business fueled on hope. 'Not 'hope' in like the 'racetrack hope,' but hope rooted in the fact that our family has weathered storms for 40 years,' she said. 'I do firmly believe in our brand. I love our brand, and so I'm just hopeful that something is going to get better.'
Bloomberg
01-05-2025
- Business
- Bloomberg
Align's Kefauver on Tariffs, Tax Cuts and MAHA: Choppin' It Up
Where we were with trade talks six weeks ago and where we are now are very different and that trajectory will continue over the next six weeks to six months, Align Public Strategy's Founding Partner Joe Kefauver tells Bloomberg Intelligence. In this episode of the Choppin' It Up podcast, Kefauver sits down with BI's senior restaurant and foodservice analyst Michael Halen to discuss why he thinks the worst of the tariff showdown is behind us. He also comments on tax cuts, the MAHA movement's progress and a recent study on the impact of the FAST Act.
Yahoo
24-04-2025
- Business
- Yahoo
Chipotle stock drops after company reports first same-store sales decline since the pandemic
Battling for burrito sales in a slowing economy. Chipotle's (CMG) stock dropped over 4% on Thursday after its first quarter report missed expectations and it lowered its 2025 forecast. Its same-store sales declined 0.4% year over year, the first drop since COVID-19 shut down stores in the second quarter of 2020. Analysts had expected growth of 1.74%; it had clocked a 7% jump in the same period last year. Transactions fell 2.3%, the first decline since 2022. That's compared to the 1.22% drop the Street estimated and a 5.40% jump last year. Average check size increased 1.9%, though Chipotle announced a 2.7% price increase last fall. "We talked to consumers broadly about what is causing them to sit on the sideline in this economy, it's really trying to save money, [and] uncertainty around what's going on with the global economy." Chipotle CEO Scott Boatwright told Yahoo Finance in an interview. "As we dig into specifically what's going on with the Chipotle consumer, we're not seeing a loss of customers. What we are seeing is a convenience challenge, meaning we need to build more restaurants as quickly as we can to get to our 7,000 restaurants in North America." The burrito chain reported a 6.4% jump in revenue to $2.88 billion, missing expectations of $2.94 billion. Adjusted earnings per share of $0.29 slightly beat estimates of $0.28. For fiscal 2025, the company lowered its guidance. For the full year, the company now expects sales to increase in the low-single-digit range, versus previous guidance of low- to mid-single digits. Prior to the report, Wall Street expected same-store sales to grow 3.46% for 2025. "Based on our forecast, we will return to positive transactions in the second half of the year," Boatwright said. The company plans to increase its digital ad and marketing spend, introduce new sides or a new dip this summer, and provide a new limited-time offering. Listen: Can TGI Fridays not go bankrupt again? Shares of Chipotle have dropped 19% in 2025. Prior to the report, it had been about flat for the past month, while McDonald's (MCD) was up 4.2% and the S&P 500 (^GSPC) slid 5.1%. Here's what Chipotle posted for its first quarter results, compared to Bloomberg consensus estimates: Adjusted earnings per share: $0.29 versus $0.28 Revenue: $2.88 billion versus $2.94 billion Same-store sales growth: -0.4% versus 1.74% Average check growth: 1.9% versus 2.69% Transactions: -2.3% versus -1.22% Investors are weighing potential risks like exposure to avocado costs, ongoing wage inflation pressure (including from fast food minimum wage laws like the FAST Act), intense competition, and "economic sensitivity," per William Blair analyst Sharon Zackfia. Before the report, Zackfia called 2025 the "tale of two halves," with the first half lagging in same-store sales growth and margins as Chipotle faced headwinds like a later Easter, higher prices, and investments in portion sizes. For now, the immediate impact of tariffs will be how they weigh on consumer sentiment instead of food costs. Inflation-weary diners have already been turning to lower-cost options. According to KPMG's March consumer pulse survey, 26% of respondents were visiting fast food and quick service restaurants more often over the past year, whereas 38% were going to casual dining less often. Avocados and most produce from Mexico are exempt under the United States-Mexico-Canada agreement. Only 2% of Chipotle's total sales come from Mexico, including avocados, tomatoes, limes, and peppers. Mexican tomatoes, which likely make up 1% of Chipotle's cost of goods, will be subject to a 21% tariff starting July 14. Boatwright said the company could absorb that impact. Read more: What Trump's tariffs mean for the economy and your wallet TD Cowen's Andrew Charles said in a client note that beef from Australia, Chinese goods, non-Mexican avocados, and Mexican tomatoes "now represent the most significant tariff exposures." Altogether, he estimates that "worst case" would lead to an "unmitigated impact of 3.3% cost of goods inflation." Chipotle CFO Adam Rymer said, "We estimate these tariffs will [have an] ongoing impact of about 50 basis points, and due to inventory on hand, we anticipate a 20 basis point impact in Q2, which is included in our guidance." Boatwright said it will take time to see the full impact of tariffs, including on equipment. "Most of the equipment that we use here in the US is manufactured in the US. ... Component parts are the things that will be subject to tariffs," he explained. There are currently 27 Buys, nine Holds, and zero Sells on Chipotle's stock, according to Yahoo Finance data. Zackfia remains a buyer, "given our belief that the underlying brand appeal remains healthy with potential positive wild cards associated with improved throughput." Zackfia said over the next few years, Chipotle could increase from mid-20 orders per peak 15-minute period to the low 30s with better tools and staffing. Charles also gave a Buy rating. "We continue to have confidence in Chipotle's traffic driving ability with the most tangible medium-term driver the continuation of thru-put improvements that we believe is in middle innings," he wrote. He added that "Chipotle's value perceptions continue to outperform fast casual peers by a wide margin." — Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@ Click here for all of the latest retail stock news and events to better inform your investing strategy
