By Members of the Save Local Restaurants Coalition

September 23, 2022

Already coping with the rising cost of food, crippling cost of living and uncertain economic climate, Californians are about to get an additional tax to go with it.

Who are we? We make some of your favorite foods and drinks. We’re employees and small business owners. We’re consumers, like you, and we’re ordinary citizens. But we’re all united in our concern about a new law that California legislators and the governor are trying to force onto businesses and hardworking customers. That’s where the voters come in.

The FAST Act, signed by California Gov. Gavin Newsom, is expected to increase fast food prices by 20%, and it will disproportionately hurt millions of families that can least afford it.

We share the goal of providing employees with fair pay, job growth opportunities, and workplaces that are safe, inclusive, and respectful. Yet even the state government itself opposed the bill because it would make it more difficult to achieve this goal and carried a significant cost for taxpayers.

The only thing certain is that the law will create a redundant, unelected council of political appointees with extraordinary power to establish mandates for tens of thousands of counter-service restaurants and dramatically increase the cost of doing business in California.

Again.

The effects of these changes won’t be contained to counter-service restaurants. Small businesses not directly covered by the law will be forced to raise wages and prices to compete for staff. How can the owner of an independent restaurant expect to hold on to their staff when a quick-service franchisee down the street is suddenly forced to pay their employees $7 more per hour almost overnight? To retain staff, businesses will have to immediately hike wages to match the pay of surrounding establishments, threatening their ability to survive or resulting in even higher costs for customers.

California businesses already support workers with the highest statewide minimum wage in the nation currently at $15 an hour and among the most comprehensive worker protections in the country. Jobs in the counter-service industry also offer an additional benefit – serving as an entry-point to the workforce for thousands of workers every year, especially from underserved populations. Now, that hangs in the balance.

We know that hardworking Californians are already struggling. Over 70% of Californians visit quick-service restaurants each week. They count on great food at prices they can afford. In lower-income communities already hit by rising grocery prices, many families rely on the value of food options offered by counter-service restaurants.

And now they’ll pay more.

The law would increase labor costs 60% – in a single year – according to a study by the University of California, Riverside Center for Economic Forecast and Development. That’s not even counting the costs of implementing new work rules this council will undoubtedly create.

The quick-service restaurants targeted by the law – which include coffee shops, juice bars, pizzerias, delis, and salad shops – already operate on small, single-digit profit margins. These include more than 10,000 small businesses, including thousands of women- and minority-owned businesses. 

If these restaurants are forced to absorb the costs, the result will be bad for workers and local communities. To survive, many restaurant owners will have no choice but to reduce worker hours or introduce automation. Some may choose to leave their communities entirely or go out of business.

As is often the case with overreaching California policies, this is likely only the beginning.

Many labor leaders, including Service Employees International Union (SEIU) President Mary Kay Henry, have said they want to push similar measures across the U.S., but we know voters in California and around the country don’t want this. Amid record inflation, the last thing they need imposed is another costly and regressive policy.

Neighborhood restaurants are critical to our local communities. We know that these restaurants can only thrive if we support our workers by providing good jobs at good wages. At the same time, we know it is essential to support the more than 10,000 small business owners working hard to succeed and millions of hardworking Californians facing higher costs at every turn.

This law creates a food tax on consumers, kills jobs, and pushes restaurants out of local communities. We do not support that. And we know Californians agree.