NEW REPORT: Proposed LA Restaurant Ordinance Would Pile an Additional $96,000 in Annual Costs on Local Restaurants Already Reeling from $20 Minimum Wage

For Immediate Release: June 19, 2025

Contact: Molly Weedn  molly@weednpa.com 

Sacramento, CA— A new report released today by Oxford Economics confirms what local restaurant owners have warned for months: the City of Los Angeles’ proposed Costly Restaurant Ordinance would pile $96,624 in new annual costs per restaurant—on top of the $250,000 per year many restaurants are still struggling to absorb from last year’s 25% minimum wage hike for fast food workers. Combined, these policies would saddle local restaurants with more than $340,000 annually in new operating costs for some locations. 

Oxford Economics warns the ordinance would intensify the damage already caused by the wage hike—leading to even more job losses, higher food prices and restaurant closures across Los Angeles. 

Oxford Economics’ report comes as City staff are currently preparing “report backs”—as directed by the Los Angeles City Council—expected to recommend expanding the City’s Fair Work Week Ordinance to include fast food workers and to establish a mandatory, off-site “Know Your Rights” training program targeting the fast food industry.

According to the report, the Ordinance’s off-site training mandate and rigid scheduling requirements would cost:

• $48,312 per year for restaurants with 25 employees
• $96,624 per year for restaurants with 50 employees

“Los Angeles restaurants are already on life support,” said Lilly Rocha, President and CEO of the Latino Restaurant Association. “This ordinance is a sledgehammer to an industry that will knock out even more local jobs and family-owned businesses. This is a direct hit to the Latino and immigrant small business owners who make up the backbone of LA’s restaurant industry.”

The Costly Restaurant Ordinance comes as California’s fast food industry continues to absorb the damage from the state’s $20/hour minimum wage:

• 36,565 Jobs Lost: Seasonally-adjusted data from the U.S. Bureau of Labor Statistics’ Current Employment Statistics (CES) shows California lost 36,565 fast food jobs since AB 1228 was signed into law in September 2023.
• 14.5% Increase in Food Prices: A report by the Berkeley Research Group found food prices at California’s fast food restaurants have surged by 14.5% since September 2023—nearly double the national average of 8.2%. 
• 750+ Restaurant Closures in LA: According to the City of LA’s Office of Finance Business Filings Database, 760 LA restaurants have shut down since AB 1228 passed, with owners citing the $20/hour wage and unsustainable operating costs as key reasons for closing.
• Workers Lost Approximately 7 Weeks of Work: Federal data from the U.S. Census Bureau and Bureau of Labor Statistics’ Current Population Survey – Outgoing Rotation Group (CPS-ORG) shows that non-tipped restaurant workers in California lost a median of 5 hours per week after AB 1228 took effect—equivalent to nearly two months of work per year.
• A survey of local restaurant owners confirms this data: Nearly 90% of local restaurant owners impacted by the $20/hour minimum wage reported reducing employee hours to offset rising costs, with 87% planning additional cuts over the next year. 
• Technology and Automation are Replacing Workers to Offset Increased Labor Costs: Restaurants are accelerating the use of ordering kiosks, AI drive-thru systems, and robotic kitchen automation, reducing available entry-level jobs and shrinking employment per location.

The Ordinance’s rigid scheduling mandates would eliminate one of the defining features of quick-service restaurant jobs: flexibility. Oxford Economics warns these rules will lead to:

• Fewer hours per worker
• Lost opportunities to pick up extra shifts or trade schedules
• Higher rates of involuntary part-time employment

“Our employees rely on flexibility to juggle their many obligations, including family, school and other responsibilities—it’s one of the main reasons they choose to work in restaurants,” said Leon Wu, a Subway franchisee in Los Angeles. “But this ordinance would result in less flexibility and stricter schedules for my workers. These rigid rules don’t reflect how restaurants operate or the flexibility our teams depend on.”

The burdens imposed by the proposed ordinance would devastate LA’s diverse local restaurant community. Nearly 60% of California’s local restaurants are owned by people of color, 50% by women and 70% of franchisees own just one location. These restaurants simply cannot absorb another massive cost increase.

“This ordinance doesn’t level the playing field—it punishes the very businesses that reflect and serve our communities,” Rocha added.

The Protect LA Restaurants coalition is calling on the Los Angeles City Council to reject the Costly Restaurant Ordinance and work with local restaurant owners on policies that protect jobs, preserve employee flexibility and keep small businesses afloat.

You can read the full Oxford Economics report here.