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Which fast-food chains are raising prices in California to pay wages?

Your next bowl of burrito could cost you more than $12 thanks to a California law that will significantly raise wages for fast food workers next month, a cost increase that big chains like Chipotle say they can pass on to consumers.

During an earnings conference call in February, Chipotle Chief Financial and Administrative Officer Jack Hartung warned, “To cover the cost of the wage increase, we would need an average price increase of figure in California. »

The law, Assembly Bill 1228, was signed by Gov. Gavin Newsom in September and takes effect Monday. It requires restaurants – both corporate and franchise-owned – with 60 locations nationwide to raise the pay of their California-based workers to $20 an hour, $4 more than the overall minimum wage state rate of $16 per hour.

Although Chipotle has not yet announced a final decision on the new prices, many other chains like McDonald’s, Starbucks and Jack in the Box say they are also considering imposing the increase on consumers or changing their operations. The law also called for the creation of a restaurant industry council to set future wage increases and advise on working conditions.

Here are the fast food favorites that are raising their prices or changing the way they operate.

McDonalds

There will be no uniform price change across McDonald’s menu items, as company-owned and franchise locations will make different changes to their menus.

A McDonald’s spokesperson told the Times that the company is studying several ways to offset increased labor costs and has not yet decided how much it will raise the price of menu items in its stores belonging to the company.

In franchises, which make up 95% of the brand’s U.S. portfolio, McDonald’s provides “informed pricing recommendations,” but the final price is at the franchisees’ discretion, the spokesperson said.

Starbucks

Coffee lovers can expect a slight increase in the price of their caffeinated drinks, but Starbucks has not revealed when or by how much it will raise its prices.

The company chose to increase salaries for all employees, regardless of their experience level, a spokesperson told the Times.

Pizza Hut

Pizza prices won’t increase, but two Pizza Hut operators in the state have eliminated in-house delivery, forcing their local customers to rely on third-party apps.

Operators laid off more than 1,200 drivers to reduce their workforce ahead of the implementation of Assembly Bill 1228, Business Insider reported.

“Where some California franchisees have chosen to make changes to their approach to staffing, access to delivery service will continue to be available through Pizza Hut’s mobile app, website and phone ordering , and the customer ordering experience will remain consistent,” Chelsea Mack, a spokesperson for the company, said in an email to The Times.

Pizza Round Table

For memory :

2:49 p.m. March 28, 2024An earlier version of this article stated that Excalibur Pizza was the owner of Round Table Pizza. The franchise owner is FAT Brands.

One of Round Table Pizza’s franchisees, Excalibur Pizza, said in a Worker Adjustment and Retraining Notice, a 60-day written notice of upcoming layoffs, that it plans to eliminate 73 driver positions. by mid-April. The most recent WARN report shows the company has served 71 layoff notices.

The change will shift the Roundtable’s delivery options to third-party service providers. Round Table Pizza told the Times that it views the layoffs as a “job transfer” because workers will be needed for third-party delivery services, where they are typically employed as contractors without many protections or benefits for the workers.

“That said, delivery service fees may increase and the customer will most likely see even higher prices due to this ongoing change,” said Erin Mandzik, spokesperson for FAT Brands, owner of Round Table Pizza. “Operators are doing their best to retain staff and keep the doors open, that’s the real issue. »

As for possible price changes, it depends on the franchisee, but FAT Brands helps its operators maintain margins.

“Whether it’s designing value-driven limited-time offers, providing strategic menu pricing advice, or realizing savings on merchandise costs through our significant purchasing power, we are in the thick of it with our operators,” Mandzik said.

Aunt Anne and Cinnabon

Alexander Johnson is a franchisee of several Auntie Anne’s and Cinnabon locations in California. Johnson operates five locations of each company in the Bay Area and said rising wages are leading him to consider layoffs and close some locations, ABC 7 reported.

Among the downsides, Johnson said, it would also mean he would have to raise prices.

It’s unclear if and when pretzel or cinnamon baking sites under Johnson’s purview will permanently raise their prices.

Jack in the box

Jack in the Box menu items could also see an uptick. During recent earnings calls, CEO Darin Harris said the company would depend on upward price adjustments, expecting menu prices to rise 6% to 8%, Nasdaq reported.

The company is confident it will navigate these changes by working with its franchise counterparts and “leaning on their decades of experience in the state,” a brand spokesperson said.

“Increasing menu prices slightly will allow us to help our franchisees, many of whom are themselves former employees who began their careers in the restaurant business, provide a better customer experience,” the spokesperson said.

“We will continue to take a thoughtful approach to pricing strategies to meet our customers where they are and provide them with the best Jack in the Box experience possible.” »

Times staff writers Andrea Chang and Don Lee contributed to this report.

California Daily Newspapers

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