JACK - Jack in the Box Chipotle and First Watch trade lower after California advances fast-food wage bill

Restaurant chains with a heavy presence in California are on watch after the state legislature passed a bill on to Governor Gavin Newsome that would create a council to establish minimum pay and safety rules for the restaurant industry in the state.

The bill is considered a step toward sectoral bargaining in which workers and employers negotiate compensation and working conditions on an industrywide basis.

Several business and restaurant groups are urging Governor Newsom to veto the bill.

Jack in the Box ( NASDAQ: JACK ) was the leading decliner in the restaurant sector Tuesday morning with a 8.55% decline.

"Both of Jack in the Box’s chains [Jack In The Box and Del Taco] have significant exposure to California and may face higher labor and regulatory costs if Governor Newsom signs the bill into law next month," warned Bloomberg Intelligence analyst Michael Halen.

Other restaurant stocks with a sizable California presence on a percentage basis that traded lower on Tuesday included Kura Sushi USA ( KRUS ) -5.47% , First Watch Restaurant Group ( FWRG ) -4.05% , and Chipotle ( CMG ) -1.89% .

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