BBQ reassures franchisees “We aren’t the target” amid California’s 25% minimum wage hike
Genesis BBQ Group, the company operating the popular Korean fried chicken franchise BBQ, is actively expanding in the United States but has encountered challenges due to a new minimum wage law in California. The state has passed a law requiring a 25% increase in the hourly wage for fast-food restaurant employees.
BBQ has informed its franchisees through a letter that they are not the target of this law. However, legal experts warn that franchisees might face liability in wage disputes, potentially disrupting business operations.
On April 18, BBDOTQ USA, BBQ’s U.S. subsidiary, issued a letter to its franchisees in the U.S. stating, “Following numerous consultations and based on advice from labor law experts over the past year, BBQ is confident that it does not fall under the scope of any wage increase legislation,” according to retail industry insiders.
This correspondence was prompted by the recent implementation of California’s AB1228, a law raising the minimum wage to $20 per hour for employees at fast-food chains with more than 60 locations nationwide, up from $16. The law establishes the Fast Food Council, which will adjust the minimum wage annually by up to 3.5% for the next decade, depending on inflation rates.
BBQ argues it is exempt from this wage increase for two reasons. Firstly, unlike BBQ’s focus on dine-in service, the law targets establishments where customers order and take away food quickly. Secondly, the legislation applies to brands with at least 60 locations in the U.S., and BBQ operates fewer than 60 stores that would qualify under these criteria.
Despite having over 200 locations in the U.S. across three different formats: BBQ Chicken Essentials, focusing on carryout and delivery; BBQ Chicken Café, offering both dine-in and carryout; and BBQ Chicken & Beer, specializing in dine-in service, the company maintains that fewer than 60 of these are BBQ Essentials stores subject to the new wage law.
However, experts believe BBQ might still have to comply with the bill. They argue that the company could be liable since the total number of BBQ-branded stores exceeds the threshold and, additionally, if more than half of its revenue is derived from takeout and delivery.
Labor lawyer Kim Hae-won said, “The law is expected to apply based on the overall presence of a brand, not merely the specific store type. Despite assurances from BBQ, franchisees may still need to increase wages to avoid legal issues during disputes.”
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