Californians, tired of fast food chains raising prices, are now fighting back – by moving their business elsewhere.
Greg LaVay, a 79-year-old retired entrepreneur from San Diego, says he used to go to McDonald’s several times a month, but recently decided to switch to sit-down restaurants. table for dinner.
For what? LaVay noticed that the price of hamburgers in his area was reaching $2.50 apiece, with a Big Mac costing $5.39 today.
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“I feel a little bit ripped off,” he told the Wall Street Journal.
Since the September ruling that California fast-food franchisees would be required to raise their employees’ minimum wage to $20 starting in April, several restaurants have embarked on cost-cutting measures, such as increase in menu prices.
A recent analysis from market research firm Datassential finds that fast-casual restaurants in the Golden State, such as McDonalds, Chick-fil-A and Pizza Hut, have overall increased their prices by about 10 percent since September. This growth far outpaces that of the United States as a whole, which saw chains inflate their prices by just over 5%.
California franchisees raise menu prices
Several fast food chains have announced they will raise menu prices in response to the minimum wage hike.
Kalinowski Equity Research says menu prices at some restaurants have increased as much as 8% since early April, with Wendy’s leading the pack, NBC Los Angeles reports.
During a recent earnings call, Chipotle reported a 6% to 7% increase in menu prices at its California locations in April in light of the recent increase. And Gordon Haskett Research Advisors found that Chick-fil-A prices have jumped 10.6% on average in California since mid-February, according to the Journal.
However, a spokesperson for California Gov. Gavin Newsom told the Journal that fast food chains can afford to give their employees raises.
“These are salaries that will be used to cover basic necessities like rent and groceries,” he said.
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Customers are opting for smaller, independent restaurants
California’s wage law does not apply to establishments with fewer than 60 national locations, so small, independent restaurants are not impacted by higher labor costs.
As a result, some customers are turning to small, neighborhood businesses to benefit from lower prices.
Seth Amitin, a 39-year-old therapist based in Los Angeles, told the Journal that he saw his usual $16 meal he picked up once a week at a Chick-fil-A in Hollywood increase to 20 $.
“There’s a really good taco place just down the street. They kept the price of their burrito at $10. I definitely eat there more often,” Amitin said.
John Matthews, a 62-year-old project manager from Imperial Beach who spends about $600 a month eating out, also decided to patronize independent table-service restaurants rather than big chains like McDonald’s and Chipotle.
“I still eat out, but much more selectively,” Matthews told the Journal.
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