Fast-Food Chains in California Significantly Spike Prices on Menus

Restaurants in California are staying true to their word that menu prices would increase following the state’s rise in the minimum wage for fast-food workers.

According to market research firm Datassential, customers buying burgers, burritos, and chicken sandwiches at restaurant chains in California are experiencing higher prices than those in other states. These costs have been steadily rising over the past few months.

Since California’s decision in September to raise the minimum hourly wage from $16 to $20 by April for key fast-food chains and fast-casual restaurants, prices at those establishments have spiked prices by 10% overall. This rise exceeds all other states, according to Datassential’s analysis, which looked at thousands of restaurants across 70 major chains conducted by the firm.

The firm found that McDonald’s, Chick-fil-A, Domino’s, Burger King, Pizza Hut, Jack in the Box, and other fast-food chains have increased their prices since September.

In an investor call on Wednesday, Chipotle said that during the first week of April, prices rose by 6% to 7% at almost 500 of its California locations compared to last year.

In an interview, chief executive officer of Chipotle, Brian Nicco, said, “The state isn’t making it easy.”

During a recent April afternoon in Los Angeles, Seth Amitin, a 39-year-old therapist, mentioned that his regular $16 meal from the Chick-fil-A in Hollywood, California, has now risen to $20. Research by Gordon Haskett Research Advisors found that the price of a spicy chicken sandwich at that same location shot up from $6.29 to $7.09, marking a 13% increase since mid-February. Across California, Chick-fil-A’s prices rose by an average of 10.6% during that time period, according to Gordon Haskett.

Amitin said, “There’s a really good taco spot just down the street. They kept their burrito prices at $10. I’m definitely eating there more often.”

In April, California’s 25% wage increase took effect, and advocates, including Democratic California Governor Gavin Newsom, argued that the law would make wages and working conditions better for hundreds of thousands of fast-food workers in the state.

A spokesperson for the governor said fast-food companies do have the means to give their staff a rise in salary. They said, “These are wages that will go towards basic necessities like rent and groceries.”

The restaurant industry invested millions in the battle against the wage law and prepared to launch a referendum campaign. However, in the end, they reached a deal with supporters in September. As a reaction, companies such as McDonald’s, Jack in the Box, Shake Shack, and others announced plans to raise menu prices in California. Some McDonald’s franchisees anticipated added labor costs of hundreds of thousands of dollars per restaurant.