🍕 Why Fast Food Prices are Rising in California

Fast food prices are rising in California, and these restaurants blame California’s new minimum wage policy.

Last fall, Governor Gavin Newsom signed a law requiring fast-food chains with 60 or more locations nationwide to pay their workers at least $20 an hour. Fast food workers in California will earn 25% more than the state’s $16 minimum wage for all other industries.

The law went into effect on April 1st, and the impact is already starting to show in the prices at your favorite fast-food restaurants for California locations, per Kalinowski Equity Research:

• Burger King’s prices are up 2%

• Wendy’s prices are up 8%

• Starbucks’ prices are up 7%

• Taco Bell’s prices are up 3%

• Chipotle’s prices are up 7%

The other downstream impact of the increase in the minimum wage in California is job losses. Between September, when the bill was signed, and January, fast-food restaurants axed nearly 10,000 jobs, and more job cuts are expected soon. Many fast-food restaurant chains also plan to expand their footprint in other states where minimum wage laws are lower, such as the Sun Belt states, and, in some cases, reduce their footprint in California.

Labor advocates typically argue for the need for a “living wage,” but something tells me they won’t be happy paying $20 for a Happy Meal or the prices that come with it.

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