The cost of menu items at McDonald’s and Chipotle is set to rise next year due to an upcoming increase in California’s minimum wage for fast food employees, as confirmed by both companies. Starting April 1, fast food workers in California will earn a minimum of $20 per hour, a nearly 30% rise from the existing minimum wage of $15.50 per hour.
Advocates argue that the wage bump will help workers in a state with some of the nation’s priciest cities escape poverty. Critics, however, contend that the added labor costs will strain franchise owners and will ultimately be transferred to consumers.
During a recent earnings call, Chipotle’s Chief Financial Officer, Jack Hartung, revealed that the company plans to adjust its prices upward by as much as 9% across its roughly 450 locations in California. McDonald’s CEO Chris Kempczinski was more reserved during his company’s earnings call, stating that while there would be an effect on wages in California, the specifics of how this would influence menu prices were yet to be determined. McDonald’s has also indicated that it anticipates an annual price increase of just over 10% by the end of the year, following a similar increase last year. This is in addition to the expected price adjustments when the new wage law takes effect next year.
Both McDonald’s and Chipotle have reported revenue growth, with McDonald’s seeing a 14% increase to $6.69 billion for the quarter ending on Sept. 30, and Chipotle reporting an 11.3% increase to $2.5 billion last quarter.
The hike in California’s fast food minimum wage came as part of a settlement between labor and business organizations. The deal allowed the industry to avoid a referendum related to wages in 2024 and also led unions to withdraw efforts to hold fast food corporations accountable for the actions of their franchisees in California. McDonald’s also disclosed plans to increase the fee for new franchise owners from 4% to 5% starting Jan. 1, marking the first such increase in nearly 30 years.
Enrique Lopezlira, director of the University of California-Berkeley Labor Center’s Low Wage Work Program, noted that the majority of adult fast food workers in California are primary income earners for their families. According to the U.S. Bureau of Labor Statistics, the average wage for these workers is $16.60 per hour, or approximately $34,000 annually, which falls short of the $39,900 California Poverty Measure for a family of four.
Lastly, the upcoming wage increase is not a one-time event. Eligible fast food employees could see their wages rise by up to 3.5% annually through 2029. The new law applies to restaurants with a minimum of 60 locations nationally, except for establishments like Panera that bake their own bread.
More than happy to pay an extra 50-90 cents for my Egg McMuffin or burrito bowl so the staff gets a solid wage and stays. The turnover at my chipotle is terrible, making service spotty. This should help with retention.
Of course they did. The country is suffering under the current policies. We need new, effective, strong leadership…something we’re currently lacking.
West Hollywood had a head start thanks to Horvath, Shyne, Erickson and Byers: Already my bacon and cheese biscuit, hash brown and coffee is over $11.00. I’ve started to make my own breakfast at home. Dry cleaning is the same; a shirt was $8.50, now $10.50 each. We must be made of money to live in Weho.
This is a state law and wow, imagine making a whopping $800 a week now in California because of this new minimum wage law. I sense they all make breakfast at home as well.
Fast food jobs were never meant to be careers. For decades those jobs were done by kids going to school. The way out of poverty is not by making a career out of working at McDonald’s….it’s done by getting an education. These low skill jobs will be automated…just like they started to already do in Europe…what will people do when their low sill jobs are phased out and they don’t have anything more to offer? Instead of supporting paying more for low skill jobs..you should be encouraging people to get a higher education.
It’s not for you to say what any job was meant for unless you are doing the hiring. If someone wants to spend their entire life making an honest living as a fast food worker, that’s their perogative and the minimum wage was originally intended as a living wage. FACT. Obviously whatever education you got couldn’t have been all that if you don’t even know this much.
They are low skill jobs. Salary is based on what is required of the job. Fast food employment requires low skill employees…FACT. Your cheap shots mean nothing to further the discussion. Good day.
First, who are you to say these jobs are not supposed to be long term? Second, at $800 a week these jobs are certainly still NOT career jobs unless for a second household earner. Third, I would also suggest you review the levels of jobs and skills needed to work in a modern fast food outlet. McDonald’s has a “University” for a reason.
Appreciate your responses.
Especially U of McD!