California Restaurants Suddenly Close Their Doors Amid the $20 Minimum Wage Hike, Employees Thought It Was an April Fool’s Joke

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In the wake of California’s implementation of a $20 minimum wage for fast-food workers, residents might find themselves missing out on their usual cravings from Fosters Freeze or Mod Pizza, as multiple outlets have recently ceased operations without warning. 

Unexpected Job Termination Shocks Workers

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This sudden move left many employees stunned, especially those who showed up ready to work, only to discover their employment had abruptly ended. 

No Warnings Before Shutdown


A previous team member at Fosters Freeze shared that despite the owner’s voiced concerns over financial pressures from the upcoming minimum wage increase, the staff received no hints that a shutdown was on the horizon. 

Is the Minimum Wage to Blame?


Monica Navarro, the assistant general manager at Fosters Freeze, explained that the recent closure was a direct result of the wage increase. 

April Fool’s Day?


This unexpected news initially seemed like an April Fool’s Day prank to the staff. Former employee Jason Boado recounted being informed via a group chat message about the shutdown, which he initially dismissed as a joke.

Easter Ruined


The reality of the situation was grim. 

Loren Wright, the owner of Fosters Freeze, conveyed his struggle with the decision, revealing that by Friday night, he knew the likelihood of continuing operations was slim, but he chose to delay the announcement to avoid ruining Easter Sunday for his employees. Wright has publicly condemned the new wage policies, blaming them for contributing to the demise of his business.

Mod Pizza Employees Given Two-Day Notice

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Mod Pizza, often referred to as “the Chipotle of pizza” with over 500 locations in the US and Canada, recently shut down five of its locations across the state in anticipation of the wage hike, with employees at one site receiving a mere two-day notice of the impending closure. 

Job Losses Linked To Wage Increase


According to a worker from the recently closed Clovis branch near Fresno,, the closure timing coincided curiously with a statewide wage increase for fast food workers, suggesting a link to the new minimum wage laws.

While the management didn’t provide a clear reason for the closure, the consensus among the staff leans towards the financial impact of the $20 per hour wage increase.

Second Thoughts On Wage Benefits

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One former employee reflected on the initial support for the wage rise but questioned its sustainability, pondering if the benefits truly outweighed the costs, especially considering the job losses that followed.

$2,000 Goodbye


As a parting gesture, each of the displaced workers received a $2,000 severance package. Meanwhile, Mod Pizza, which prides itself on offering customizable pizzas made from organic dough, has also seen closures in New Jersey, Texas, and Wisconsin, bringing the total to 22 nationwide closures reportedly tied to economic strains.

New Era For Fast-Food Workers Begins

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Last September, Governor Gavin Newsom enacted California Assembly Bill 1287, starting a new era for fast-food workers with a $20 per hour minimum wage and establishing a regulatory council with the power to adjust this wage annually. 

Celebration Or Concern?

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Despite the celebration among workers, the ripple effects of this legislation have been contentious, rekindling an age-old economic debate. 

Critics argue that while the wage increase appears beneficial on the surface, it may inadvertently lead to fewer employment opportunities, reduced hours for existing employees, and higher prices for consumers—issues that have started to materialize.

Job Cuts Follow New Wage Law


Since the law’s implementation, approximately 9,500 jobs have been slashed across California’s fast-food sector, a stark 1.3 percent drop since September 2023. 

This figure is notably higher than the 0.2 percent dip in total private employment over the same timeframe, suggesting a direct correlation between the wage hike and job reductions. 

Mass Layoffs Amid Rising Wages


The industry has also witnessed significant layoffs, including nearly 1,300 delivery drivers at Pizza Hut and Round Table Pizza, as companies grapple with increased labor costs.

Robots Take Over


The transition to automation is accelerating, with chains like El Pollo Loco and Jack in the Box exploring robotics for tasks such as salsa making and frying to curb operational expenses. 

The Aftermath Of Wage Rises


The impact on pricing is equally palpable: within a month of the wage increase, notable price surges have been observed with Wendy’s, Chipotle, and Starbucks all hiking their prices by 7 to 8 percent. 

McDonald’s Response To Wage Hikes

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McDonald’s and several other franchises have also indicated upcoming price adjustments and hiring freezes, signaling a broader industry shift as businesses strive to balance wage costs with service affordability.

Tough Decisions 

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Employers are facing tough choices with limited options. With industry profit margins typically ranging from 5 to 8 percent, the primary adjustments available are reducing workforce sizes or increasing customer prices. 

This financial predicament is amplified by the ongoing debate over what constitutes a “living wage” for less-skilled, often part-time workers.

Advocating For A Livable Wage

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Advocates for higher wages argue that these increases are essential for workers’ livelihoods. However, this stance sometimes overlooks the economic realities faced by fast-food owners and their investors, who require reasonable returns on their investments and compensations for their efforts. 

Unintended Outcomes 


The unintended consequences of these wage policies have become evident, as evidenced by the job losses of thousands of fast-food workers across California since the law’s enactment. 

When Well-Intentioned Policies Backfire


This stark outcome illustrates a critical point: while living wages aim to improve worker conditions, they can also lead to no wages at all when businesses are unable to bear the increased costs, potentially marking another instance where well-intentioned laws backfire.

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Kate Smith, a self-proclaimed word nerd who relishes the power of language to inform, entertain, and inspire. Kate's passion for sharing knowledge and sparking meaningful conversations fuels her every word.