LA’s Latino-owned restaurants are struggling—why is the City making it worse?

Nick Cavallo and Mario Munoz own and operate six Subway franchises across Los Angeles.

As sons of immigrants, we never dreamed that two kids from Los Angeles—without any business experience—could one day own and operate 10 successful restaurants. Through hard work and sacrifice, we built something meaningful and we’re proud of our business that employs dozens of hardworking men and women, serves our community, and provides for our families.

But today, a wave of costly new regulations—including a 25 percent minimum wage increase for fast food workers—has pushed many local restaurants like ours to the brink. At the same time, inflation continues to drive up the cost of food, supplies, and rent, and now our neighborhoods are facing a long road to recovery from the recent devastating wildfires. Yet, instead of helping small businesses stay afloat, the Los Angeles City Council is considering another costly ordinance that will make it even harder for minority small business owners like us to survive.

Owning a restaurant has never been easy, but it used to be a reliable way for working-class families and immigrants to build something of their own. In 1988, after years of grueling 55+ hour workweeks at other jobs, we pooled our savings and took a leap of faith to open a Subway restaurant in Manhattan Beach. We had no safety net—we put everything on the line, believing that with enough hard work, we could build a stable future.

We were right—at least for a time. But the past few years have been brutal for local restaurants, and last year’s unexpected 25 percent wage hike for fast food workers only made things worse. At our peak, we employed over 120 people across ten restaurants. But as costs soared, we were forced to make heartbreaking decisions—closing four of our restaurants in Los Angeles. Today, we’re down to just 70 employees, struggling to keep our remaining locations open

We’ve been forced to cut shifts, reduce staff, and raise menu prices just to keep the lights on. Each month we have to evaluate how much longer we can keep our doors open and weigh the options of closure versus more staff reductions.

A July 2024 survey of local restaurant owners lays bare the far-reaching impact of California’s new $20 minimum wage law:

• 98 percent raised food price
• 89 percent reduced employee hours
• 70 percent cut staff or consolidated positions
• 74 percent reported an increased likelihood of shutting down entirely.

These numbers tell the story of an industry in crisis. Since the passage of AB 1228 in September 2023, food prices at California’s limited-service restaurants have jumped 13.1%—almost double the national average. California’s fast food industry, once a job creator, has shed over 6,100 jobs in just nine months. Compare that to the same period the year before, when the industry added more than 17,500 jobs.

It’s not clear why small restaurant owners like us were singled out with the wage hike, but it’s unfathomable that yet another attack on our industry could be justified in such short order.

Yet rather than acknowledging this economic reality, the L.A. City Council is doubling down on policies that will drive more Latino-owned businesses like ours into the ground, many of which are already operating on razor-thin margins.

Even more frustrating, this ordinance is unnecessary and duplicative. The newly established statewide Fast Food Council was created specifically to develop minimum standards for workplace protections for restaurant employees, including training requirements. It makes no sense for the City of L.A. to divert its already stretched staff and resources to enforce an unnecessary law when the state is already addressing these issues.

As lifelong Angelenos, our heart goes out to our neighbors and to our city, both of which are facing years of recovery from the historic wildfires. City leaders should be focused on the urgent challenges that lie in front of us, not wasted on redundant regulations that will drive up food prices even further and force more small businesses to close.

We understand firsthand what it means to struggle, to work our way up from minimum-wage jobs to owning a business. We know better than most how to treat our employees with fairness and respect—because we were once in their shoes.

We pursued the American Dream with the hope of providing a generational opportunity for our kids and their kids. But for too many minority business owners, that dream is slipping away.

We urge the L.A. City Council to rethink this costly and unnecessary ordinance. Instead of making it harder for small businesses to survive, our leaders should focus on making Los Angeles a place where small businesses can thrive. Because when small businesses succeed, so do the workers and communities that depend on them.

This piece was published in La Opinion’s print edition on February 16, 2025.