Justin Foronda is a creative, driven, second-generation entrepreneur who will thrive in Los Angeles.
Born and raised in historic Filipinotown, Foronda opened Hi-Fi Kitchen in 2019 and kept the doors open through sheer activism amid the economic turmoil caused by the pandemic.
Last year, the 37-year-old hosted a Filipino holiday market across the street from Hi-Fi, drawing crowds to the neighborhood. He started holding board game nights at his store to attract customers. The following weekend, he organized a panel of DJs and hosts to discuss the history of Filipinos in hip-hop, and created drink and food specials for each panelist.
He has also tried opening gift shops, selling apparel, and selling desserts. He offers new specials almost every week. Ms. Foronda works as a nurse on weekends and uses most of her earnings to fund the restaurant.
As a result of his efforts, he gained around 6,000 followers on Instagram and kept the restaurant open for five years. No small feat considering the economic distortions of the past five years. But with California's new minimum wage for fast food workers taking effect this month, Foronda says she's starting to run out of gas.
He supports raising the minimum wage and wants to pay workers more generously. But the minimum wage is rising rapidly, so any increase in compensation he planned as a retention strategy would soon become the new minimum wage.
“We're like playing Mario Kart, just always trying to reach that boost,” Foronda said.
Small business owners across Los Angeles are facing an even more costly reality: price disruptions caused by the pandemic will become permanent. Foronda said eggs can cost $40 a case or $125 a case. So how much should you charge for extra eggs?
The new minimum wage is a valuable attempt to address growing income disparities within the state. More money going into the hands of fast food workers, who are more likely to be women, immigrants, and minorities, is a good thing.
Fast food is and always has been too cheap. In a world where a scoop of Chipotle's guacamole costs nearly $3, McDonald's $1 menu items and 50-cent Jack in the Box tacos are an anachronism. Michael Reich, a labor economist and professor at the University of California, Berkeley, said fast-food companies are using their dominant position in the labor market to keep wages and prices too low.
“I don't think demand for hamburgers will go down that much even if we raise prices a little bit,” Reich said, referring to major fast-food chains.
But fast food's new wages change the labor equation for all small businesses competing for entry-level workers. Higher wages at fast-food restaurants will put upward pressure on all of these wages, adding further stress to businesses already struggling to pay high urban rents. Restaurants and retailers facing high commercial rents and rising supply chain costs must decide whether and by how much to raise prices.
“These grassroots businesses are part of the glue that holds communities together and give them identity,” said Chris Tilley, a professor of labor economics and urban planning at UCLA. “Starbucks doesn’t play the same role.”
At Paul's Kitchen in downtown Los Angeles, manager Charlie Ng has shortened the storied diner's hours to save on labor costs. The restaurant is currently closed on Tuesdays and is not open for dinner. Pandemic-related government aid has kept them afloat, but Ng doesn't know what they'll do once it runs out.
Ng has raised prices when ingredients become more expensive, but he tries to keep the increases to less than $1. Ng said customers have been understanding.
“Customers have not complained about the price so far,” Ng said. “Even they know how expensive everything has become.”
Reich, the economist, said the immediate impact of the wage increase would not be extreme because many entry-level jobs already pay above the minimum wage.
But many small businesses, especially those in urban areas with high rents, cannot afford to absorb the new costs. If we want non-chain small businesses to be part of Los Angeles' future, we need to level the playing field. Unless we build an economy that truly supports small and medium-sized enterprises, individual business owners will continue to be usurped by the real estate interests of highly capitalized companies. In Berkeley, for example, small businesses have access to special loan funds and enjoy a simplified permitting process.
A high minimum wage could be part of that future. More money for fast food workers means more purchasing power in communities and neighborhoods that need it, and more revenue for local businesses. But someone always has to pay the price for California's progressive politics, and too often it's minorities, immigrants, and wage earners who pick up the slack.
Foronda, on the other hand, is trying to keep his goals modest. He started the year hoping to make it by February, the restaurant's fifth anniversary. His new short-term goal is Filipino American History Month in October. So if he has to close out the business, at least he'll be able to go out in good spirits.
“Five years was a time for me to take a step back and look at how this applies to my life, what my health is like, what my mom's health is like,” Foronda said. Told. “So now we're here.”
