Fast food restaurants in California have shifted the blame onto consumers. According to a recent survey, 98% of all fast food restaurants in the state have raised their prices in response to the new $20-an-hour minimum wage law. Not surprisingly, however, the CEOs of said restaurants have not taken a pay cut. Let’s look at the numbers.
Californian fast food restaurants have shirked responsibility
In June, In-N-Out became the first California fast-food restaurant to raise its prices in response to the minimum wage increase. “On April 1, we gradually increased our prices to provide a pay increase for all employees at our California restaurants. The price increase was also necessary to maintain our quality standards,” the company said in a statement to KTVU at the time.
The Employment Policies Institute surveyed 182 restaurant owners in the Golden State in June and July to find out how they were affected by the minimum wage increase. Limited-service restaurant operators and partner associations participated in the online survey.
The EPI is a nonprofit think tank run by a restaurant lobbyist who has opposed raising the minimum wage.
According to the survey, 67 percent of restaurant owners said the wage increase would result in losses of at least $100,000 for each location, while 26 percent of respondents estimated the cost to be more than $200,000.
In addition, 98% of restaurant owners said they have already increased menu prices. About 89% of employers said they have reduced employee hours, 73% said there are fewer opportunities for overtime or pick-up work, and 70% said they have reduced staff or consolidated positions.
The minimum wage increase also affected owners’ perceptions of future growth in California: 89 percent of them said they would be less inclined to open new stores in the state, while 59 percent said they would be more inclined to expand outside of California.
Interestingly (or maybe not), CEOs of California fast-food restaurants still earn a handsome salary. According to Investor’s Business Daily, the average CEO of a fast-food restaurant earned an average of $6,617 per hour in 2019, which is more than 500 times the average salary of a fast-food restaurant worker at the time.
First adopted in April 2024
This year’s minimum wage increase went into effect in April. $20 per hour is the wage for employees at California fast-food restaurants, which have over 60 branches across the country. The increase exceeds the state’s general minimum wage of $16 per hour.
This wage increase followed the passage of a law in September. The law was supported by Governor Gavin Newsom, who stressed the need for better wages and working conditions for the state’s more than 500,000 fast food workers. The law also created the nine-member Fast Food Council, whose duties included regulating future wage increases and setting guidelines for working conditions through 2029.
Despite the price increases at the California branches, In-N-Out heiress Lynsi Snyder insisted that her restaurant would be among the fast-food restaurants in California committed to “cost control” despite the minimum wage increase.
Snyder, who took over the burger company after her father’s death and led it through many difficulties over the past 14 years, emphasized her commitment to maintaining affordable prices for customers. In internal meetings, she summarized her attempts to prevent significant price increases, emphasized her commitment to reasonable prices and cited her sense of duty to protect customers.
The affected employees will receive annual compensation of $41,600 as a result of this change.
