- Fast food workers in California will earn $20 an hour starting April 1
- Chains like McDonald's and Chipotle will raise prices to offset the pay increase
- The average cost of a burger in this state is already $7.02, while the price of a chicken sandwich is $6.02
California residents will pay the price for a new law that raises the minimum wage for fast food workers, as mega-chains like McDonald's and Chipotle have said they will raise menu prices to offset the liberal governor's new bill.
Fast food workers will be paid at least $20 an hour when the law signed by Democratic Gov. Gavin Newsom takes effect April 1.
According to Revenue Management Solutions, the average cost of a burger in the Golden State is already $7.02 and a chicken sandwich averages $6.02. Now both – which were already among the highest in the country – will rise with the new law.
For every dollar an hourly wage increases, a restaurant must increase prices by 2 percent to offset the costs, the industry consulting firm said.
Chipotle expects to raise menu prices in California by 5 percent to 9 percent to cover higher wages, the Wall Street Journal reported.
According to Revenue Management Solutions, for every dollar an hourly wage increases, a restaurant must increase prices by two percent to offset the costs
Fast food workers will be paid at least $20 an hour when the law signed by Democratic Gov. Gavin Newsom takes effect April 1
Chipotle Chief Financial Officer Jack Hartung told analysts on a company earnings call that the chain would likely increase prices by a “mid- to high-single-digit” percentage because of the law change.
McDonald's Chief Executive Chris Kempczinski said on an earnings call that the law would have an “impact on the wages of our California franchisees” – and suggested price increases would follow.
“Certainly there will be some part of this that will have to be solved with higher prices,” he said.
“There will also be things that I know the franchisees and our teams there will be looking at for productivity.”
“As this all unfolds, there will certainly be a near-term impact on cash flow for franchisees in California. It is difficult to say exactly how much impact this will have due to some mitigation measures.”
Jack in the Box said it will increase prices by 6 to 8 percent companywide this year to offset increased wages in California.
Two Pizza Hut franchise owners with hundreds of locations across the Golden State laid off 1,200 delivery drivers in the new year as they prepare for the minimum wage law to take effect.
The restaurants said they would instead rely solely on third-party apps like DoorDash and UberEats.
The new law applies to workers at restaurants that have at least 60 locations nationwide — excluding restaurants that make and sell their own bread, like Panera Bread.
According to the U.S. Bureau of Labor Statistics, the minimum wage has increased to $20 per hour, compared to an average of $16.60 per hour, or just over $34,000 per year.
Chipotle Chief Financial Officer Jack Hartung told analysts on a company earnings call that the chain would likely increase prices by a “mid- to high-single-digit” percentage because of the law change
Two Pizza Huts have laid off 1,200 delivery drivers in California and are instead relying solely on third-party apps like DoorDash and UberEats
That's below California's poverty measure for a family of four, a statistic calculated by the Public Policy Institute of California and the Stanford Center on Poverty and Equality that takes housing costs and publicly funded services into account.
According to Enrique Lopezlira, director of the University of California-Berkeley Labor Center's low-wage labor program, most fast food workers in California are over 18 and are the primary breadwinners for their families.
However, as fast food chains raise menu prices, California is losing hundreds of thousands of residents, with many citing the high cost of living as the reason for the displacement.
According to the US Census Bureau, the Golden State lost a total of 341,866 people in 2022.
San Diego, Los Angeles and Santa Barbra are three of the most expensive cities in the country, according to US News and World Report's 2023-2024 list.