A McDonald’s franchisee who owns 18 outposts in California is considering reducing store hours, hiking menu prices and delaying renovations to offset the impact of the state’s $20 hourly minimum wage for fast-food workers.
Scott Rodrick said he’s had to rethink his business strategy in the wake of the new law, which went into effect April 1 and has spurred some of his fast-food rivals to raise menu prices.
“There is more than extraordinary labor costs stressing restaurant P&Ls right now,” Rodrick, whose 18 McDonald’s are located in northern California, told Business Insider.
“The same grocery inflation that consumers at home worry about is also worrying restaurants just as a basket of groceries.”
“So what I’m really dealing with, outside of the historical pace of things, is this double-barrel shotgun of backdoor food costs and now labor going off and leaving a brutal mark on my unit profitability,” he added.
Rodrick had already lifted his prices between 5% and 7% between January and March in anticipation of the California law going into effect
“The appetite that my customers have for price increases is not unlimited,” he said.
Rodrick expressed concern that if he pushes prices too high, customers will swap their fast-food fixes for fast-casual options like Chili’s and Applebee’s, where they could get the restaurant experience for just a few more bucks per head.
To mitigate his labor costs Rodrick is rethinking the length of operating hours and whether to plow money into capital expenditures.
“So for example, if I have to replace an HVAC [unit[ on the roof, I might push that off to 2025 or 2026,” he said.
He’s also discussed delaying a dining room remodel at one of his McDonadl’s locations, which are run via his company, Rodrick Management Group.
He lamented California’s decision to hike the minimum wage exclusively for workers at limited-service restaurant chains — which applies to eateries with at least 60 outposts nationwide where diners pay before eating and there is either no or limited table service.
“Whether you work at my drive-thru, whether you work at the bookstore down the street or the gas station next door, a fair starting wage for one should be a fair starting wage for all,” Rodrick said. Representatives for Rodrick Management Group did not immediately respond to The Post’s request for comment.
Even before the California law went into effect, McDonald’s CEO Chris Kempczinski admitted that inflation would compel the fast-food chain to raise menu prices.
McDonald’s locations in wealthy areas such as Fairfield County, Conn. are charging around $18 for a Big Mac meal.
A separate McDonald’s restaurant in Connecticut was charging diners $7.29 for an Egg McMuffin and $5.69 for a side of hash browns.
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