After California’s contentious $20 minimum-wage mandate went into effect on April 1, several fast-food restaurant chains have increased menu prices by as much as 8% to offset financial consequences.
The price hikes were reported by Kalinowski Equity Research (KER), which compared menu prices at 25 individual restaurants for each chain along with specific menu items before and after the wage hike. According to the data, Wendy’s increased its prices by roughly 8% while Chipotle raised its prices by 7.5%. Chipotle raised the price of its chicken burrito by 8.3% and its steak burrito by 7%.
KER also found that Starbucks increased prices by about 7%. Taco Bell hiked its prices by 3%. Same with Burger King, which raised prices by 2% and increased the price of its Whopper Meal by an average of 1.4%.
Several McDonald’s franchisees said they would increase menu prices after the mandate went into effect, but KER said the restaurants haven’t done so yet.
Hailed as “extraordinarily beneficial” by Gov. Gavin Newsom, the minimum-wage mandate — called AB 1228 — is essentially a collective deal between state lawmakers, labor unions and franchisees following a months-long battle regarding a wage increase for local fast-food workers. In anticipation of the hike, several franchisees laid off their workers in an effort to cut costs and remain profitable. The Wall Street Journal reported that several pizza chains, including Pizza Hut and Round Table Pizza, began cutting an estimated 1,280 delivery jobs this year. Southern California Pizza Co. announced layoffs in December of around 841 drivers across the state, FOX Business said. Smaller restaurants like the San Jose-based Vitality Bowls downsized their team of employees and announced they aren’t hiring anytime soon.
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