Many fast food workers in California have made more money since April 1, when the state’s minimum wage for these workers increased to $20 an hour.
But restaurateurs, eager to protect their profits, raised menu prices paid by consumers to help offset the cost.
Often, fast food outlets are operated by franchisees, which are business owners who operate a small group of stores and pay a company like McDonald’s for the right to do so. This means that individual franchisees may choose to pass on higher labor costs, while others do not.
The new California law applies to chains with at least 60 “limited service” establishments in the United States, that is, restaurants where customers order and pay for their food before getting it instead of s sit down and be served.
Here are the restaurants – and some franchisees – that have decided to increase menu prices since the new minimum age came into effect in California:
McDonalds: Scott Rodrick, owner of 18 McDonald’s restaurants in Northern California, said he would raise prices. It was also considering changing its store hours and postponing planned dining room renovations to save money.
Individual franchisees make their own decision about raising prices, the company told the Los Angeles Times.
Burger King: Burger King restaurants in California raised their prices by 2%, according to a report from Kalinowski Equity Research that examined prices at several fast food chains in the state before and after April 1.
Chipotle: The Mexican steakhouse chain’s prices rose 7.5% in California after the law took effect, according to the Kalinowski report. The company’s chief financial officer said during a February conference call that Chipotle would raise menu prices because of higher wages.
Wendy’s: Menu prices at Wendy’s increased 8% in California, according to Kalinowski.
Starbucks: Drinks at Starbucks stores in California were 50 cents more expensive after April 1, BI reported after the law took effect. The Seattle-based coffee chain’s California stores grew 7 percent, according to Kalinowski.
Taco Bell: Menu prices increased by 3% after the new wage law came into force, Kalinowski noted.
Big hamburger: Marcus Walberg, whose family operates four Fatburger franchises in Los Angeles, told BI in January that he planned to raise prices between 8 and 10 percent in response to the new wage law. He also planned to reduce employee PTO and freeze hiring, he said.
Vitality Bowls: Brian Hom, the franchisee in charge of two Vitality Bowls locations in San Jose, raised prices between 5% and 10% after the law took effect, he told BI. It also stopped hiring and reduced the number of workers on duty per shift.
Fast food already had an affordability problem, Business Insider reported last year.
Indeed, some restaurateurs say they have already raised prices more than usual over the past two years in response to inflation and fear another round of increases will scare off customers. A Burger franchisee told BI that he is instead installing ordering kiosks in his restaurants to save money on wages.
Lynsi Snyder, president and third-generation owner of In-N-Out, told NBC’s “Today” show earlier this month that she pushed to limit menu price increases in response both to rising wages and general inflation.
“I was sitting in vice president meetings and saying, ‘We can’t raise prices that much, we can’t,’” she said. “Today.” “When everyone was jumping, we weren’t.”
Do you work at a fast food restaurant and have a story idea to share? Contact this reporter at abitter@businessinsider.com
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