On April 1, 2024, a small fast food restaurant in Lemoore, California, closed its doors permanently after years of serving burgers, soft-serve ice cream, and steady paychecks to local workers.

The closure did not come from a lack of customers or mismanagement.

According to owner Lauren Wright, it came from a single change in state law.

“The last thing I ever wanted was to close down,” Wright told local reporters.

By the end of March, he said, it had become clear that his business could not survive under California’s new fast food minimum wage of $20 an hour.

Wright’s Fosters Freeze, located in Kings County about 35 miles south of Fresno, became one of the first visible casualties of Assembly Bill 1228, the law signed by Governor Gavin Newsom in September 2023.

The statute raised the minimum hourly wage for fast food workers from $16 to $20 beginning April 1, 2024, for chains with more than 60 locations nationwide.

The law was designed to lift wages for more than half a million workers in California’s fast food industry.

Instead, its first year has produced a wave of layoffs, store closures, higher menu prices, and reduced working hours that economists, workers, and business owners continue to debate.

California has the largest fast food sector in the nation, with more than 7,200 locations and roughly 557,000 employees.

It is the state’s second-largest low-wage occupation, behind only home health aides.

A sudden 25 percent wage increase across such a large workforce represented one of the most ambitious sector-specific labor experiments in modern U.S.history.

Within months, the consequences began to emerge.

Before the wage increase even took effect, large franchises began cutting staff.

In December 2023, Pizza Hut operators across California filed notices under the Worker Adjustment and Retraining Notification Act announcing the elimination of all delivery driver positions.

More than 1,200 drivers in Southern California and hundreds more in Sacramento and Northern California lost their jobs.

Several drivers reported receiving severance payments of only a few hundred dollars after years of service.

Customers were redirected to third-party delivery services such as DoorDash and Uber Eats, shifting costs away from the company and onto gig workers and consumers.

Other chains followed similar paths.

MOD Pizza closed several California locations before April.

Round Table Pizza reduced staffing levels.

Vitality Bowls and other fast-casual brands announced layoffs and postponed expansion plans.

The closures accelerated after April 1.Rubio’s Coastal Grill, a San Diego-based chain that helped popularize fish tacos in the United States, closed 48 California locations on May 31, 2024.

Thirteen of those closures occurred in San Diego County, 24 in Los Angeles County, and 11 in Northern California.

Four days later, the company filed for Chapter 11 bankruptcy protection, listing more than $25 million in debt and less than $10 million in cash.

Rubio’s leadership cited rising labor and operating costs as major factors.

The company was sold weeks later to an undisclosed buyer, a sharp reversal from its $90 million valuation when private equity firm Mill Road Capital acquired it in 2010.

Smaller operators faced even harsher choices.

At Wright’s Fosters Freeze in Lemoore, employees initially believed the April 1 closure notice was an April Fool’s joke.

Assistant manager Monica Navarro said she learned of the shutdown through a phone call on Monday morning after Easter.

“I would rather have been making $16 an hour and still have a job than make $20 an hour for two hours,” Navarro said.

Her experience reflects a broader trend.

According to a survey by the Employment Policies Institute, 87 percent of California fast food operators reduced employee hours after the wage increase took effect, and 71 percent cut supplemental benefits.

For many workers, higher hourly pay was offset by fewer shifts and smaller weekly paychecks.

Kevin Chen, a fast food worker in Sacramento, saw his wage rise from $16 to $20 an hour in April 2024.

But his weekly hours dropped from more than 30 to fewer than 20.

“I thought I was going to make more money,” he told local television reporters.

“I’m actually making less because they cut my hours.”

Economists tracking the policy say the employment effects are real and measurable.

A study published in November 2025 by researchers affiliated with the National Bureau of Economic Research estimated that California’s fast food sector lost approximately 18,000 jobs compared with what would have occurred without the law.

Employment declined about 2.7 percent relative to the rest of the country, where fast food employment continued to grow.

Another analysis by University of California, San Diego economist Jeffrey Clemens found that much of the job loss occurred before April 2024, as employers anticipated higher labor costs and began reducing staff in advance.

Even a study from UC Berkeley’s Institute for Research on Labor and Employment, partially funded by labor unions that supported the law, acknowledged reductions in hours and increases in prices, though it concluded that total job losses were limited.

Meanwhile, the Bureau of Labor Statistics reported that California’s limited-service restaurant sector lost roughly 16,000 jobs between September 2023 and March 2025.

At the same time, menu prices climbed sharply.

Chipotle announced price increases of 6 to 7 percent in California in April 2024.

Starbucks raised prices by about 7 percent.

Jack in the Box implemented increases of up to 8 percent at some locations.

McDonald’s franchisees reported raising prices between 5 and 8 percent in the first weeks after the law took effect.

According to NetCredit, a financial research firm, California now has the most expensive fast food in the nation, with prices about 20 percent above the national average.

Fast food prices in the state rose 10 to 12 percent between late 2023 and the end of 2024, more than double the national rate.

McDonald’s executives acknowledged the shift.

Chief executive Chris Kempczinski told investors that menu prices nationwide have risen about 40 percent since 2019 and that lower-income customers are increasingly choosing to eat at home.

“We are in a battle for customers making under $45,000,” he said.

“They are choosing to eat at home.”

For franchise owners, the math has become unforgiving.

The National Owners Association estimates that AB 1228 adds roughly $250,000 in annual labor costs per restaurant.

Some operators postponed equipment repairs, delayed technology upgrades, and reduced staffing to compensate.

Yet not all businesses are failing.

Ingrid and Sharon Michaelsson, who own 26 El Pollo Loco restaurants across Southern California, say they prepared early by conducting detailed cost reviews, negotiating supplier contracts, and adjusting portion sizes and staffing models.

“We knew this was coming,” Ingrid Michaelsson said.

“We adapted, but it has not been easy.”

Their approach highlights a growing divide in the industry.

Large chains and well-capitalized operators can spread costs across hundreds of locations, invest in automation, and absorb short-term losses.

Smaller, independent franchisees often cannot.

The broader economic effects extend beyond restaurants.

Commercial landlords report rising vacancies in strip malls and shopping centers as fast food tenants close.

Food distributors, equipment maintenance firms, uniform suppliers, and delivery contractors face declining demand.

The Employment Policies Institute estimates that lost fast food jobs represent between $640 million and $720 million in annual wages removed from local economies.

Supporters of AB 1228 argue that higher wages improve living standards for workers who remain employed and reduce turnover in an industry known for instability.

Critics counter that the law has eliminated thousands of entry-level jobs and raised prices for working-class consumers.

Both claims contain elements of truth.

The policy did raise wages for many workers who retained sufficient hours.

But it also coincided with widespread layoffs, hour reductions, closures, and rapid price increases.

The law includes automatic annual adjustments tied to inflation, and the newly created California Fast Food Council is empowered to approve further increases.

In early 2025, the council considered raising the minimum wage to $20.

70 in 2026, though final approval remains pending.

Industry analysts expect continued adaptation.

Chains are expanding self-service kiosks, experimenting with artificial-intelligence ordering systems, and investing in automated fryers and burger assembly lines.

Ghost kitchens and delivery-only formats are proliferating, while traditional dine-in locations shrink.

Similar experiments in Seattle, New York City, and parts of Europe produced comparable patterns: fewer locations, higher prices, heavier automation, and reduced entry-level employment.

California’s experience is now being closely watched by lawmakers in other states considering sector-specific wage mandates.

For workers like Monica Navarro and owners like Lauren Wright, the debate is no longer theoretical.

“This was my community,” Wright said after closing his Fosters Freeze.

“I wanted to keep people working.

I just couldn’t make the numbers work anymore.”

As California’s fast food industry continues to adjust, the state has become a testing ground for a central question in modern labor policy: whether higher mandated wages can lift living standards without shrinking opportunity.

The answer is still unfolding, one closed restaurant and one shortened work schedule at a time.