Former Fast Food CEO Warns Massive Restaurant Closings on Horizon

In a recent interview on “Varney & Co.,” Andy Puzder, the former CEO of CKE Restaurants, which owns Carl’s Jr. and Hardee’s, expressed his concerns about the future of the restaurant industry.

Puzder predicts that many restaurants, particularly those in the mid-performing range, will struggle to survive as they navigate the delicate balance between rising menu prices and labor costs.

“People just can’t afford these prices. And there’s only so much you can do to reduce prices,” Puzder explained.

He believes that as more restaurants close their doors, the remaining establishments will experience an influx of customers.

However, this may not be enough to offset the challenges posed by the current economic climate.

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A Fox News Digital analysis highlighted the dramatic increase in fast food prices over the past few years, even before the onset of the COVID-19 pandemic.

For instance, the iconic McDonald’s Big Mac, which cost $3.99 in 2019, now carries a price tag of $8.29, according to Fast Food Menu Prices.

Similarly, Subway’s famous $5 Footlong sandwiches have been replaced by more expensive options, with a BLT Footlong now costing $8.49, up from $5.50 in 2019.

Restaurant owners are exploring various strategies to reduce costs and avoid raising prices further.

Puzder revealed that one fast food chain CEO is considering outsourcing drive-thru order-taking to professional order takers in India or the Philippines.

This move would eliminate the need for in-restaurant staff to handle this task, potentially cutting labor costs.

The situation is particularly challenging in California, where a $20 minimum wage mandate for restaurants with at least 60 locations nationwide went into effect in April.

While this law aims to improve workers’ livelihoods, restaurant owners have cautioned that it will lead to job cuts and higher prices for consumers.

Several California-based food chains, such as Pizza Hut, Southern California Pizza, Round Table Pizza, and Vitality Bowls, have already announced layoffs in response to the law’s passage.

Data from the Federal Reserve Bank of St. Louis reveals that fast-food prices have increased at a faster rate than the average hourly earnings of fast-food restaurant employees nationwide.

Moreover, fast-food prices have outpaced inflation, rising by 41% since 2017, while the consumer price index has increased by 35.9%.

Reflecting on the current state of the industry, Puzder admitted that he would not return to work in the restaurant business today, given the challenges faced by operators.

“It was hard when I did it. It’s a very competitive business, you’re really out there, it’s very cutthroat. But now the government’s making it impossible,” he said, referring to his experience running Hardee’s and Carl’s Jr., which were previously headquartered in California before he relocated the company to Nashville.

The current economic climate, coupled with government regulations, has created a perfect storm that is forcing restaurant owners to make difficult decisions to keep their businesses afloat.

While some may argue that higher wages are necessary to support workers, the unintended consequences of such policies cannot be ignored.

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As more restaurants close their doors, the ripple effect on employment and consumer choice will be felt across the nation.