Livable wages mean more expensive burgers as California fast-food chains hike menu prices

When California’s groundbreaking law raising fast-food workers’ minimum wage from $15.50 per hour to $20 took effect at the start of April, food chains including Chipotle, Chick-fil-A, Pizza Hut, and Jack in the Box warned customers to expect higher menu prices. Those increases are now materializing: prices for items at several major chains have risen since the law was signed in September, according to market research firm Datassential. Since September, California’s fast-food prices have climbed 7%, outpacing the national increase.

Impact on Workers and Businesses

• 22 states raised their minimum wage in 2024, affecting nearly 10 million workers.
• Higher wages help low-income workers keep pace with inflation and narrow gender, racial, and ethnic wage gaps, as people of color are overrepresented among minimum-wage earners.
• Businesses are offsetting higher labor costs by raising prices, with some chains increasing menu prices by 5% to over 10% since April.
• One Pizza Hut franchisee cited the wage hike as the reason for laying off over 1,000 delivery drivers across California.

Price Changes at Major Chains

• Chipotle: 6%–7% increase across California locations in early April.
• Chick-fil-A: Over 10% average price increase at California locations since April.
• Starbucks, Shake Shack, Chipotle, and Taco Bell: Roughly 5% price increases from mid-February to mid-April, compared to a 0.4% national rise in restaurant prices.

Broader Economic Effects

• California employs more fast-food workers than any other state, followed by Texas, Florida, and New York.
• The state now offers the highest guaranteed base salary for fast-food workers ($20/hour) and a $16/hour minimum wage for other workers.
• Nearly 10 million U.S. workers will receive raises, with over half being women, 2.5 million being working parents, and more than 50% earning below the poverty line.
• Higher wages could reduce government spending on programs like SNAP and tax credits by billions.

Effects on Other Sectors

• California’s school food service industry, excluded from the $20 minimum wage, faces pressure to compete with fast-food pay.
• Sacramento Unified School District raised wages by 16% over two years to reach $20/hour, the largest single raise in nearly 30 years.
• Some districts struggle to match fast-food wages, offering limited hours and no benefits to food service workers.