How California Fast Food Restaurants Responded to The Minimum Wage Increase By Raising Prices
Many fast-food restaurants in California responded to the new minimum wage by increasing prices, with some even going up a staggering 8%. Here are some of the best-known places and their reactions to the $20 minimum wage hike.
Some restaurant items surpassed expectations
Alan Gin, an economist at the University of San Diego, told CalMatters that a 10% increase typically leads to a 2% to 3% increase in prices. With wages going from $16 to $20, or 25%, the expected growth of fast food prices was 5-7.5%. He noted that 5% was the expected price increase.
Prices are up to 8%
According to the Post, Wendy’s raised prices by 8%, followed by Chipotle Mexican Grill, a chain that increased prices by 7,5%. These numbers were based on Kalinowski Equity Research findings.
Starbucks followed
The same report found that popular coffee chain Starbucks increased prices by 7% in its California locations, while Taco Bell raised prices by 3%. Burger King’s increase was around 2%. Kalinowski Equity Research created its report by considering 25 locations for each chain.
More increases
Chipotle boosted the price of Chicken Burrito by 8.3% and Steak Burrito by 7%. McDonald’s was recently called out on social media over “McFlation.” A woman in Southern California talked about the 40-piece chicken McNuggets bundle price. The company confirmed the prices mentioned were higher than average, but they are under the direction of franchisees.
Chains raised prices everywhere
A Finance Buzz report compared the prices of the most popular chains and found that McDonald’s menu prices have doubled since 2014. Popeyes increased its prices by 86%, while Taco Bell was in third place with an increase of 81%.
Smallest hikes
Among the most popular chain restaurants, Subway and Starbucks have raised prices by 39% since 2014, the lowest among all chains included in the report. Chipotle raised its costs by 75%, while Burger King increased prices by 55%.
On average, that’s a 60% increase
Among all restaurants included in the study, it was found that prices in chain restaurants went up 60% on average, almost double the national inflation rate. The list of items with the highest price is led by McDonald’s and Popeye’s signature meals, starting with McChicken, which has risen almost 200% since 2014.
Fast food is no longer affordable
While prices in California have reached new heights, people have been complaining about fast food prices ever since the pandemic. In November, one McDonald’s customer went viral for paying $16 for a burger, a large fry, and a drink. Last March, another person shared that they paid $16.89 for a Big Mac combo meal.
People’s opinions on California’s minimum wage increase are divided
Chris Tilly, a professor who studies labor markets, inequality, and public policies, said that people are led to believe that wage increases lead to job losses. However, since minimum wages have been so low in the past three decades, such claims are impossible to make.
Other issues to think about
The professor reminded people that the state’s core issues should be housing affordability and labor market barriers. However, addressing these issues should not be done at the expense of low-income families.
Customers need a break
Following months of social media complaints, McDonald’s CEO said in February that the company will focus on affordability. He did not clarify specific price cuts nor when the company plans to start its new chapter. He noted that eating at home is more affordable, especially for low-income families.
Inflation on the menu
Federal data show that food prices were up 1.3% in December 2023, while limited-service restaurant prices were up 5.9%. But not all companies are eager to make it big: In-N-Out Burger raised its prices in California from $0.10 to $0.25, amounting to a 1.5%-4.5% increase.
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