#FastFood | KRG Hospitality

A frustrated cartoon slice of pizza carrying a suitcase and leaving the state of California

June 14, 2024by David Klemt David Klemt No Comments

FAST Act Fallout far from Finished

FAST Act Fallout far from Finished

by David Klemt

Have you ever seen a more frustrated slice of pizza in your life? I doubt it.

The battle over the implementation of California’s FAST Act appears to be heating up further, with multiple parties attempting to land blows on one another.

Depending on the source, the Golden State’s fast-food minimum-wage hike to $20 per hour is either killing jobs or adding them. One side says that limited-service and quick-service restaurants have shed nearly 10,000 jobs since Governor Gavin Newsom signed the FAST Act into law.

On the other side, proponents are pointing to data the Bureau of Labor Statistics (BLS) released recently to paint the situation in a better light. According to this data, LSRs in California added 4,500 jobs between September of last year and April of this year.

However, those unhappy with the FAST Act have downplayed this net gain in fast-food jobs. According to reports, that increase in jobs represents a recurring seasonal trend. Further, some sources claim that the data showing a gain in jobs includes restaurants other than LSRs, so the information is being spun to look positive.

One group is so unhappy with Gov. Newsom’s implementation of the FAST Act, they released an obituary-style ad to make their grievance known.

“In Memoriam”

Below, a social media post displaying the “in memoriam” ad from the California Business and Industrial Alliance (CABIA).

📢 Today, we called out @GavinNewsom in a full-page ad in USA Today for the harmful impact of California’s recent minimum wage hike on fast-food restaurants. Nearly 10,000 jobs lost since AB 1228 was signed into law. CA deserves better policies that support growth and stability.… pic.twitter.com/CCpAk3L2j0

— @cabia (@cabia_speakup) June 6, 2024

The full-page ad is available for viewing here.

Jonathan Maze, editor-in-chief of Restaurant Business, also spoke out against California’s $20 minimum wage for fast-food workers.

During an appearance on FOX & Friends First, Maze addressed how the state handled the pay hike.

“You’ve got two issues, really. You have the fact that it was done almost overnight,” said Maze. “You have the fact that it was a 25-percent increase in the wage rate. Both of those things happening simultaneously, is a really hard thing for restaurants’ bottom line, and you’re seeing the effects of it.”

Brand Relocation

In a development that won’t assuage Gov. Newsom’s critics, a California-born fast-food brand has announced it’s leaving the state.

Blaze Pizza, which opened its first location in Irvine, California, in 2012, has announced the relocation of its headquarters to Atlanta, Georgia. Currently, the brand’s headquarters is located in Pasadena. The move will take place later this year, and it’s not expected to impact the company’s roughly 7,500 employees.

It will, however, impact Blaze Pizza’s taxes. Moving to Atlanta will reduce the QSR’s corporate tax rate by at least a third.

This begs a couple questions: Is this simply a business-savvy move that will reduce Blaze’s taxes and allow it to allocate more resources to further the brand’s growth? Or did the brand analyze the FAST Act’s impact on its bottom line and decide to flee the state for greener pastures?

One can argue the situation is closer to the former than the latter, as Blaze has stated that store-level employees won’t be impacted by the reorganization.

But on the other side of the coin, one can argue the move to Atlanta is a direct response to FAST. Cutting taxes by a third (if not more) may help Blaze avoid restaurant-level job cuts or store closures.

Messy

One thing is mostly clear regarding California and the FAST Act: the situation, so far, is messy.

The tendency is usually to say that as things play out, data will tell the tale. Unfortunately, as this situation is showing us, that’s not always the case. Data is being spun to support agendas.

One thing I’ll say is that I’m happy some fast-food workers’ lives are improving. Or, at least their wages have gotten better. But, of course, if their employers are cutting hours or eventually closing stores, is that improvement sustainable?

And then there are the guests. Reports appear to indicate that more and more Americans now perceive fast food to be a luxury. That doesn’t bode well for LSRs and QSRs in California in particular, nor for fast-food operators across the US.

This situation is complex, with many factors impacting California’s restaurant workers, operators, and guests. We likely won’t know the true impact of the FAST Act until the end of this year, at the earliest.

Other states looking at implementing similar measures should keep their eyes trained on California before moving forward. Legislators need to meet and actually listen to independent and chain operators, along with people representing the workers in good faith.

Image: Shutterstock. Disclaimer: This image was generated by an Artificial Intelligence (AI) system.

Pop art image of a giant money bag wrapped in golden chains looming over a city skyline

April 30, 2024by David Klemt David Klemt No Comments

The Top 10 Restaurant Chains in 2023

Check Out the Top 10 Restaurant Chains by Sales in 2023

by David Klemt

Well, I asked for an image of a giant money bag wrapped in golden chains, looming over a city skyline. Nailed it, AI.

Technomic data reveal the top-performing restaurant chains in the United States of America by sales volume in 2023, and number one won’t be a surprise.

For a bit of context and history, Technomic has been ranking the top chain restaurants in the US since 1978. And, according to reporting, the same chain has held the number-one spot every year.

Feel free to take a moment and make your guess as to which chain continues to lead all others each year.

Alright, if you guessed McDonald’s, congratulations.

Not only is McDonald’s the largest chain in the US by sales, the company outperformed the rest of the list by a significant margin. In 2023, McDonald’s generated more than $53 billion in sales via more than 13,450 units.

That’s nearly $20 billion more in sales than the chain that clinches the number-two spot. Going deeper, that’s more than double the sales of the number-three restaurant chain. In fact, McDonald’s generated just a $100 million dollars less than the sales of the second- and third-biggest chains combined.

Coming in at number two is Starbucks, achieving sales of $31.6 billion in the US from 16,466 units. Number three is Chik-fil-A, seeing $21.6 billion in sales through 2,964 stores.

The Top 10 Chain Restaurants in the US

Below, the full list of the ten top-performing restaurant chains in the US.

Perhaps unsurprisingly, quick- and limited-service restaurants account for the entirety of the top-ten list.

Notably, each of the ten chains saw sales growth last year, though that growth fluctuates from chain to chain. Some, like Chipotle, increased sales by more than 15 percent. For others, like Subway, growth was just over two percent.

Further, just two of the top-ten chains shuttered locations in 2023. Last year, Burger King reduced its US footprint by almost four percent. Likewise, Subway shrunk by two percent.

Judging by the sales numbers, closing stores last year may have proven to be a smart business decision for Burger King and Subway.

Domino’s: $9 billion (up 3.1 percent)
Chipotle: $9.9 billion (up 15.3 percent)
Subway: $10 billion (up 2.1 percent)
Burger King: $11 billion (up 6.6 percent)
Dunkin’: $11.9 billion (up 5.7 percent)
Wendy’s: $12.3 billion (up 5.1 percent)
Taco Bell: $15 billion (up 8.2 percent)
Chik-fil-A: $21.6 billion (up 14.7 percent)
Starbucks: $31.6 billion (up 12.5 percent)
McDonald’s: $53.1 billion (up nine percent)

Ending on one more interesting revelation, one chain moved up the list. Bear in mind, this is no small feat.

Domino’s, once number nine on the list, was passed by Chipotle in sales last year. We’ll see if anything changes when Technomic reveals next year’s rankings.

Image: Shutterstock. Disclaimer: This image was generated by an Artificial Intelligence (AI) system.

Tray with In N Out burgers and French fries

September 18, 2023by David Klemt David Klemt No Comments

FAST Act Fight Appears to be Over

FAST Act Fight Appears to be Over

by David Klemt

Well, that was fast: If recent reports are accurate—and it appears they are—the battle over the FAST Act has come to a close.

Rather than fight on the ballot, fast-food chain operators and labor groups have struck a deal. Per some reports, this puts a halt to a referendum battle that could have cost more than $100 million in campaign funds.

On its face, the deal is quite simple. AB 257, known as the Fast Food Accountability and Standards Recovery—or FAST Act—is dead. That is, dead save for one provision: the creation of the Fast Food Council will move forward.

The council will have a total of eleven members. Nine will have the power to vote, two will be non-voting members. The breakdown will be as follows:

two representatives of the fast-food restaurant industry (2);
two franchisees or restaurant owners (2);
two restaurant employees (2);
two advocates for fast-food restaurant employees (2);
member of the public who is not affiliated with either side (1, will serve as chair); and
members from the Department of Industrial Relations and the Governor’s Office of Business and Economic Development (2, non-voting)

Their first meeting is on the schedule for March 15.

In exchange, fast-food workers will see the minimum wage bump up to $20 per hour should they be in the employ of a fast-food chain with more than 60 locations throughout the US. That pay rise will come in April 2024.

When it comes to further pay rises, the council has two options:

An annual wage increase of 3.5 percent; or
An increase based on average changes to the consumer price index each year.

As one might expect, the rise will be whichever number is lower.

What was AB 257?

To summarize, FAST would’ve done the following:

Establishes the Fast Food Council, ten members appointed by the Governor, the Speaker of the Assembly, and the Senate Rules Committee. The council will operate until January 1, 2029.
Defines “the characteristics of a fast food restaurant.”
Gives the Fast Food Council the authority to set “minimum fast food restaurant employment standards, including standards on wages, working conditions, and training.”
Provides the council the power to “issue, amend, and repeal any other rules and regulations, as necessary.”
Allows the formation of a Local Fast Food Council by a county, or a city that has a population of more than 200,000.

Click here to review the bill’s text in its entirety.

Why is this Important?

It’s entirely possible that similar bills will pop up in other states in the coming years.

If this result is anything go by, such bills may be used by QSR operators and labor groups as negotiating tactics. The most recent news regarding the FAST Act should have the attention of both operators and hospitality workers. In California alone, the pay rise is expected to affect at least 500,000 workers.

However, there is one provision of the FAST Act that workers may find less than encouraging. The deal that has been struck kills a notable provision: fast-food operators, at least in California, won’t be held legally responsible for labor violations that occur in franchise locations.

Operators in other states should keep an eye out for similar bills, as should all hospitality professionals.

Image: Kenny Eliason on Unsplash