Burritos and Big Macs to Cost More in California as Pay Rises
Minimum wage for California fast-food workers is set to rise to $20 an hour in April, a 25% increase from the state’s broader $16 minimum wage.
Restaurants including McDonald's, Chipotle, Jack in the Box and others say they will raise menu prices in California in response, with some McDonald’s franchisees estimating hundreds of thousands of dollars per restaurant in added labor costs.
For every dollar in hourly wage increases, a restaurant needs to increase prices by 2% to make up for the additional cost, industry consulting firm Revenue Management Solutions said. Jack in the Box told investors in November that its prices will rise 6% to 8% companywide this year, primarily to cover increased wages and other costs in California.
Fast-food prices already have been running high nationwide, and consumers are increasingly fatigued by the higher costs, leading to fewer restaurant visits or smaller orders, industry data shows.
WSJ - 2/4/24