Restaurateurs in California are starting to take their own action showing disapproval of the newly-enacted statewide $20 minimum wage.
"We have a very finite set of economic conditions that need to be met for us to make money. And certainly, this bill has cast doubt [as] to whether we can continue in this state," Alex Johnson, owner of five Cinnabon and five Auntie Anne’s locations in San Francisco, said on "Varney & Co." Tuesday.
"I've already started to invest in the neighboring state of Nevada," he continued, "where there just isn't so much regulation, there isn't so many different types of people telling you how to run your business."
Johnson has reportedly committed to only invest in future franchise opportunities in Nevada, claiming that the Golden State’s recent $20 minimum wage law will cost him $470,000 across 10 restaurants.
The law, which went into effect on Monday, affects restaurants that have at least 60 locations nationwide, except those that make and sell their own bread.
Gov. Gavin Newsom signed the legislation, AB 1228, into law in September. In addition to the pay raises, it also establishes a "Fast Food Council," including representatives for both workers and employers, that can approve further pay increases and set standards for working conditions.
But restaurant owners have warned the increased pay will lead to job cuts and higher prices for consumers. Multiple California food chains – such as Pizza Hut, Southern California Pizza, Round Table Pizza and Vitality Bowls – announced layoffs following the law's passage.
For a franchise operator like Johnson, he says "everything’s on the table right now."
"I think immediately what we're doing, though, is raising prices, something that I really don't want to do. We've had to raise prices several times over the past couple of years because of the COVID-induced inflation. And we're seeing our sales decline, we're seeing traffic decline," Johnson explained.
"It's really not a good time to have to do this," the business owner added. "We're not backfilling positions, so as people move on in their careers, our employees, we're not refilling those positions. And ultimately, myself, I'm not growing anymore in the state. I'm not expanding any new locations."
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During a Los Angeles event to promote the bill, Gov. Newsom called the legislation a "big deal," and dismissed popular views that fast-food jobs are meant for teenagers just entering the workforce.
"That's a romanticized version of a world that doesn't exist," Newsom said. "We have the opportunity to reward that contribution, reward that sacrifice and stabilize an industry."
FOX Business’ Breck Dumas and Louis Casiano contributed to this report.
