Ex-fast food CEO predicts more restaurants will close nationwide over higher prices
The former Carl’s Jr., Hardee’s leader says he wouldn’t work in the industry today
Former CKE Restaurants CEO Andy Puzder gives an industry look inside how fast-food companies are trying to keep up with inflation and criticizes Biden's tax policy.
With franchise and restaurant owners confronting a delicate balancing act between higher menu prices and labor costs, one former industry leader is concerned more doors are preparing to close nationwide.
"There will be a lot of restaurants underperforming. Middle-performing restaurants are going to go away. Very good-performing restaurants will become midland or low-performing restaurants," former CKE Restaurants CEO — parent of Carl’s Jr. and Hardee’s — Andy Puzder said Tuesday on "Varney & Co."
"As more restaurants close, there'll be more customers for fewer restaurants," he continued. "But people just can't afford these prices. And there's only so much you can do to reduce prices."
A recent analysis from Fox News Digital broke down the dramatically rising fast-food prices that began even before the COVID-19 pandemic, at the most popular restaurant chains across the country.
The McDonald's Big Mac, for example, cost $3.99 in 2019. Now, that price has more than doubled to $8.29, according to Fast Food Menu Prices, an online tracker.
Former CKE Restaurants CEO Andy Puzder warns more restaurants will close their doors nationwide over surging menu prices and wage costs on "Varney & Co." (Getty Images)
Subway’s long-advertised $5 Footlong sandwiches are no more, as a BLT Footlong that cost $5.50 in 2019 now costs customers $8.49 in 2024, though prices may vary by location. Additionally, Chipotle's beloved chicken burrito that cost $6.50 in 2019 now runs customers $10.70.
"I was talking to a fast-food chain CEO about a week ago, and he was saying they're going to take all of their ordering at the drive-thru… [with] professional order takers in India or in the Philippines. It won't be anybody in the restaurant that takes your order," Puzder said. "They're doing anything they can to reduce costs so they don't have to raise prices. But there's so much pressure, particularly in California."
The Golden State saw a $20 minimum wage mandate go into effect last month, impacting restaurants that have at least 60 locations nationwide, except those that make and sell their own bread.
California McDonald's franchise owner Scott Rodrick joined 'FOX & Friends First' to discuss how price hikes have impacted his bottom line.
But restaurant owners have warned the increased pay will lead to job cuts and higher prices for consumers. Multiple California food chains, including Pizza Hut, Southern California Pizza, Round Table Pizza and Vitality Bowls, announced layoffs following the law's passage.
Additionally, data from the Federal Reserve Bank of St. Louis shows that fast-food prices have actually increased faster than the average hourly earnings of most employees at fast-food restaurants nationwide. Fast-food prices have also outpaced inflation, rising 41% from 2017, while the consumer price index has increased by 35.9%.
If given the opportunity, Puzder claimed he would not go back to work in the restaurant industry today as it’s "very, very difficult to run it now."
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Celebrity chef Robert Irvine sounds off on the new law's ripple effects on 'The Bottom Line.'
"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, particularly [for] a company like I had, which was Hardee's and Carl's Jr.," the former brand CEO said.
"When I ran it, [it] was stationed in California, [and] was headquartered in California. I moved it to Nashville. And I think that's a big reason why it's surviving."
FOX Business’ Chris Pandolfo and Breck Dumas contributed to this report.