Starting Monday, fast food workers began earning a minimum of $20 an hour after lawmakers approved a bill in 2023 despite objections from the quick-service industry.
Companies immediately responded by saying that the wage increases would result in higher consumer prices. Chipotle and McDonald's were among companies in late 2023 warning of price increases.
Based on Chipotle's app, prices on Monday are generally up to 10% higher at several Los Angeles-area restaurants than other locations across the U.S.
"It's going to be a pretty significant increase to our labor," Chipotle Chief Financial Officer Jack Hartung said in a call with investors in late 2023. "It's going to be a mid to high single-digit price increase, but we are definitely going to pass this on."
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Prices at several Los Angeles McDonald's locations on Monday were comparable to breakfast prices at locations outside of California. But McDonald's leaders noted that other restaurants could be more impacted by the wage jump.
"Longer term, what we've been talking about with our franchisees is this is an opportunity for us to gain share, because this is an impact that's going to hit all of our competitors. We're in a better position. We believe we're in a better position than our competitors to weather this," McDonald's CEO Chris Kempinski said in a call with investors in 2023. "And so let's use this as an opportunity to actually accelerate our growth in California and accelerating our growth along with some mitigation. The two of those in combination is the best way to minimize any impact long term on franchisee cash flow."
When lawmakers passed the bill in 2023, the state's minimum wage was $15.50 an hour. Lawmakers previously approved a $22 minimum wage for fast food workers, but that law faced stiff opposition from the industry.
According to state data,In-N-Out, Chipotle, McDonald's and Chick-fil-A each spent over $11 million to oppose the $22 minimum wage law. Lawmakers lowered the $22 minimum wage law before it could go into effect as the previous legislation was potentially headed to a statewide vote.
As of May 2022, California had 394,660 fast food workers, according to the Bureau of Labor Statistics,with an average pay of $16.60 per hour. The nationwide average wage for fast food workers in 2022 was $13.53 an hour.
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