How did this happen?
Two weeks before the abrupt closure of her store, Kennedy noticed that the food she ordered wasn’t arriving.
“There was no communication, there was just, ‘Keep doing your job, business as usual,’ that’s what I was told — business as usual, they’re looking for a resolution for the food order,” Kennedy told KPTV. “We were all trading food in between stores trying to keep everyone’s doors open, and then no food came.”
CapTen Enterprises and Subfecta LLC own all the shuttered franchises. Owner Ann Bell told KPTV that her bank account was hacked, and she wasn’t able to retrieve any money to pay for food or her employees’ salaries.
At the time, Subway was transitioning its ownership from a family business to a private equity firm. Because of that, Bell told KPTV that she couldn’t get their support to help her out.
Bell told Fox 12 she has contacted the Bureau of Labor and Industries (BOLI) to help her pay her employees their owed salary. However, Kennedy says she reached out to BOLI, who told her it could take up to 100 days to process.
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Fast food in hot water
Subway isn’t the only chain struggling these days. Red Lobster and Fosters Freeze have also shut locations in recent years.
And many chain restaurants with California locations are struggling to stay afloat in the wake of a recent minimum wage hike. This past April, the Golden State increased minimum wage for fast food workers from $16.21 per hour to $20 per hour — a 25% increase.
Several franchise owners recently spoke out about how they cut their employees’ hours and increased item prices to keep up with the increased minimum wage.
“We kind of just cut where we can,” said Lawrence Cheng, whose family owns seven Wendy’s locations south of L.A. “I schedule one less person, and then I come in for that time that I didn’t schedule and I work that hour.”
Some restaurant owners are actually seeing a benefit from increased wages, according to Joseph Bryant, executive vice president of the Service Employees International Union, which helped push forward the minimum wage hike in California.
“Multiple franchisees have also noted that the higher wage is already attracting better job candidates, thus reducing turnover,” Bryant told the Associated Press.
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