It was announced on Wednesday that three stores in Los Angeles would be closing their doors. The locations are Sunset Blvd. and 3300 W. Slauson Avenue, leaving many Angelenos wondering what this means for the future of grocery stores in the city.
The decision to close these stores was made after the Los Angeles City Council passed a wage mandate with a 14-1 vote, with Councilmember John Lee being the only dissenter. This mandate requires supermarkets to pay their employees additional wages, a move that has been met with opposition from many supermarket chains across the country, including Seattle, Long Beach, New York, and Los Angeles. The International Union of Food and Commerce Workers, which represents over 141,000 California workers, released a statement condemning Kroger for closing more stores. The principal legislative analyst in Los Angeles determined that the ordinance could lead to a variety of outcomes, such as temporary increases in labor costs as a percentage of the company's sales, higher prices for consumers, delays in opening stores and renovations, wage increases or promotions for employees, pressure on struggling stores that could lead to closures, and reduced hours for some employees.
Several members of the Los Angeles City Council cited moral reasons for obtaining additional compensation for frontline grocery store workers and criticized companies that threatened to close stores due to wage ordinances for heroes. Unfortunately, the Los Angeles City Council ignored its own Economic Impact Report by not considering that grocery stores operate with very low profit margins in a competitive landscape. The Food 4 Less branch at 5420 East Sunset Boulevard in East Hollywood had already removed its signature sign above the main entrance and its shelves were almost empty. This is a stark reminder of the consequences of not taking into account community concerns, expert warnings, and concrete evidence when making decisions that affect businesses in Los Angeles.
It is clear that the City Council must take into account all of these factors if they want companies to continue investing in Los Angeles. Otherwise, more stores may be forced to close their doors due to wage mandates that are not economically feasible.
