California Restaurants Dish Out Price Hikes: Menu Costs Reportedly Surge Amid Minimum Wage Increase

Restaurants across California are reportedly implementing menu price hikes following the state’s increase in minimum wage for fast-food workers.

This surge in prices has been observed at various fast-food and fast-casual chains throughout the Golden State, outpacing other regions, according to a report from the WSJ, which cited market research firm Datassential.

Since September, when California mandated large fast-food chains to elevate their minimum hourly pay to $20 by April, restaurants statewide have collectively increased prices by 10%.

Notably, this increment surpassed the price adjustments seen in other states, according to Datassential’s analysis of over 70 major chains, the report noted.

Chipotle Mexican Grill Inc CMG, for instance, disclosed a 6% to 7% price surge at its nearly 500 California locations during the first week of April compared to the previous year.

Chipotle’s Chief Executive Brian Niccol highlighted the challenges imposed by the state’s regulations.

In response to the wage law, major fast-food chains like McDonald’s Corp MCD, Jack in the Box Inc JACK, and Shake Shack Inc SHAK have planned to raise prices, estimating significant additional labor costs per restaurant, as per the report.

Despite opposition from some quarters, the wage law remains supported by advocates like California Governor Gavin Newsom. They argue that increased wages will benefit workers and stimulate local economies.

As consumers reassess their spending in light of escalating prices, independent eateries emerge as viable alternatives. The California wage law doesn’t apply to restaurants with less than 60 national locations.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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