Operations

A view from the fryer at Dave's Hot Chicken

Working in the kitchen at the growing fast-casual chain offers a unique perspective on California's $20 fast-food wage coming in April. It'll be a boon to workers, but some fear a ripple effect through the economy.
This company-owned Dave's Hot Chicken unit in the Los Angeles area has an average unit volume of about $5 million, higher than the system average of $3 million. |Photo by Lisa Jennings

When it comes to the ever-present challenge of rising labor costs, all eyes will be on California this year.

On April 1, the minimum wage for fast-food workers, specifically, will increase to $20 per hour. The move is the result of legislation known as AB 1228, signed into law last year, which will also create a Fast Food Council that has the power to increase wages annually, as well as establishing standards for working conditions and training.

Not surprisingly, the industry response to the legislation has included predictions of doom and destruction—especially observers who fear similar legislation will emerge in other states.

But in California, the measure is being met with resilience.

There will be price hikes, California operators say, but that won't be enough. They also plan to look for other ways to cut costs in their effort to protect already slim margins.

To get a better understanding of how restaurants are preparing for the wage hike, and how workers feel about it, I spent a day working at a Dave’s Hot Chicken in the Los Angeles area.

The fast-casual hot chicken concept is one of the fastest-growing chains in the country with 183 units nationwide and another 90 to 100 expected to open in 2024. It’s mostly franchised, with five corporate locations in the LA area, and this one near the campus of California State University at Northridge, or CSUN, is one of them.

The Dave’s system currently includes about 40 restaurants in California that will be impacted by the fast-food wage hike. The concept, which was founded by three friends as a parking lot popup in 2017, is a simple operation featuring chicken tenders and sandwiches with varying spice levels—from no spice to “reaper”—along with fries, sides and shakes.

Early on, Dave’s won an investment from Bill Phelps and a team that also backed Wetzel’s Pretzels and Blaze Pizza. Now investors in Dave’s Hot Chicken includes Canadian rapper Drake.

With that foundation, Dave’s growth has come on the shoulders of franchisees.

Jim Bitticks, Dave’s president and COO, argues that the union activists who lobbied for AB1228 were trying to punish big corporations representing “Big Fast Food,” like “Big Pharma” or “Big Tobacco.”

But he notes that Dave’s is run primarily by small business operators. The largest franchisee has 11 restaurants, said Bitticks, who is a franchisee of the brand himself in California with two units open and another two on deck.

Even after just a few hours of being trained by a crack team of new restaurant openers, it’s clear that working in a fast-food kitchen is hot, high-pressure and best handled by people who know what they’re doing (unlike me).

When a crew has the rhythm of a production line down, there is magic. But there is little room for error. A higher wage could lower turnover, which could be a clear benefit.

Technically, AB1228 only establishes a fast-food wage for limited-service chains with 60 units or more nationally, but a higher base wage for some chains will likely force other employers to match or exceed that wage rate to compete for workers.

Watch and hear how the good folks at Dave’s Hot Chicken give their take on the changes to come in California.

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