Survey: 98% Of California Fast-Food Restaurants Raised Prices Due To Minimum Wage Hike
High prices are just one logical result of California’s disastrous mandate to impose a $20 minimum wage on workers in fast-food restaurants.Shocker! California’s Minimum Wage Hike Leads To Job Cuts
Fast-food chains in California, in an effort to adapt to the new regulations, started reducing their workforce last year.In-N-Out Burger confirms customers can thank Democrats for higher menu prices: 'The economy is kind of bad'
In-N-Out Burger, the most recognizable California fast-food chain, has raised its menu prices because of a new minimum-wage law in California.
Last year, Gov. Gavin Newsom (D) signed a law increasing the state-mandated minimum wage at fast-food restaurants from $16 per hour to $20 per hour. The law took effect on April 1.
'When I came to In-N-Out and I was spending $20 on a meal, it's definitely something that I did not expect at all.'
Democrats who supported the law said it was necessary to provide workers with a living wage. But there are consequences of forcing restaurants to raise their minimum wages by 25% because employers rarely absorb the cost of increased wages. Typically, they pass the cost onto the consumer or their employees (in the form of layoffs). And almost immediately after Newsom signed the law, some employers announced layoffs. Other fast-food chains raised their prices or said they would increase automation.
Earlier this year, In-N-Out president Lynsi Snyder said that she didn't want to raise menu prices out of an "obligation" to her customers.
But that's exactly what the burger chain was forced to do.
"On April 1st, we raised our prices incrementally to accompany a pay raise for all of the Associates working in our California restaurants. The price increase was also necessary to maintain our quality standards," In-N-Out confirmed to KTVU-TV.
Now, the starting minimum wage for In-N-Out employees is between $22 to $23 per hour, depending on the restaurant location.
The price of a double-double meal — which includes a burger, fries, and a drink — now costs as much as $13.63 in San Francisco, KRON-TV reported. The same meal costs about $11.44 in Los Angeles County, according to KTLA-TV.
The Democrat-instituted mimimim-wage hike is directly responsible for the price increase, an In-N-Out spokesperson confirmed to KTLA.
Customers, meanwhile, said they understand the prices because they recognize the economy is "bad."
"The price increase? I understand because the economy is kind of bad. Food's going up, all type of stuff," frequent In-N-Out patron Chris Hachlica told KTVU.
"Especially coming from Georgia, California prices are a little bit higher. But when I came to In-N-Out and I was spending $20 on a meal, it's definitely something that I did not expect at all," Khalil Coleman told KTVU.
News of In-N-Out's sticker shock comes after an analysis from the Hoover Institute discovered that California's new minimum wage law has cost the state more than 10,000 jobs.
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The 3 harsh consequences of California's new minimum wage law become painfully clear: 'I'm leaving no stones unturned'
Beginning April 1, every fast food restaurant in California will have to pay their employees a minimum wage of $20 per hour. Unfortunately, the negative costs of the law, signed by Gov. Gavin Newsom (D) last year, are already adding up.
Ahead of the law taking effect, California restaurant owners are already taking steps to mitigate costs of increased labor, the Wall Street Journal reported. They are going about it in three ways.
1. Layoffs
Blaze News reported last year that two Pizza Hut franchisee-holding companies had already filed government notices to lay off all their delivery drivers, impacting more than 1,200 drivers.
Now, customers who order pizza from those restaurants and want it delivered to their house will be forced to use third-party apps, like DoorDash, GrubHub, and Uber Eats. That means customers will be paying more for the same product because of the added costs associated with those apps.
"Pizza Hut was my career for nearly a decade and with little to no notice it was taken away," Michael Ojeda, a Pizza Hut delivery driver, told the Wall Street Journal.
Round Table Pizza is also eliminating dozens of delivery driver positions. A spokesperson for Round Table's parent company, Fat Brands, said such drastic measures are necessary to ensure the overall financial health of the business.
"This is the reality of today’s restaurants. Operators are doing their best to retain staff and keep doors open," the spokesperson said.
Alexander Johnson, the owner of 10 Auntie Anne’s and Cinnabon restaurants, told the Wall Street Journal he had to reduce his workforce by 10 employees to cover the $470,000 annual cost of the forced wage increase.
Another way businesses are reducing costs is by cutting employees' hours and enacting a moratorium on hiring new employees.
"I can't charge $20 for Happy Meals. I'm leaving no stones unturned," Scott Rodrick, the owner of 18 McDonald's restaurants, told the Wall Street Journal.
2. Increased Prices
The second primary way that restaurant operators will offset the cost of government-forced payroll increases is by raising menu prices.
McDonalds, Chipotle, and Jack in the Box have already committed to raising the price of their food. You can bet other national chains will follow suit.
How much prices will go up across the board remains to be seen, though it could be as much as 8-10%.
That's because, according to the Wall Street Journal, restaurants need to increase their prices 2% to cover the cost of every $1 in hourly wage increase. Right now, the minimum wage in California is $16 per hour.
3. Automation
Burger King, Jack in the Box, Denny's, and El Pollo Loco are some of the restaurants looking to reduce costs by introducing more technology into their restaurants to replace hourly workers.
Self-service kiosks, robot fryers, and automated salsa-making are just a few ways those companies are exploring how technology can reduce labor costs.
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Uber, Lyft threaten to stop operations in Minneapolis if mandatory driver raises become law
Uber and Lyft are threatening to shut down operations in Minneapolis, Minnesota, on May 1 if a proposed driver raise ordinance becomes law, Fox Business reported.
The Minneapolis City Council approved the rideshare ordinance on Thursday by a 9-4 vote. Minneapolis Democratic Mayor Jacob Frey vetoed the measure on Friday over concerns that Uber and Lyft would leave the city.
Frey has been pushing city council members to hold off on approving the ordinance until a state study from the Minnesota Department of Labor and Industry is completed or to lower the driver raises to rates acceptable to the rideshare companies.
"I've been telling the council for six months now to wait for the data to come out," Frey stated, according to the Star Tribune.
The state's study, ordered by Democratic Governor Tim Walz, found that rideshare drivers earn an average of 48.7 cents per minute and 89 cents per mile in the Twin Cities metro area. Drivers operating in the Greater Minnesota region earn 42.7 cents per minute and $1.116 per mile.
Uber called the report "deeply flawed" but noted that "it clearly recognizes that drivers are independent contractors," KARE reported.
"With the State and, most importantly, drivers agreeing that flexibility is critical, any compromise must prioritize independent contractor status," an Uber spokesperson said.
The spokesperson claimed the "Minneapolis minimum wage proposal is off by a whopping 60%."
Lyft called the state's report "nonsensical."
"The only part of this report that is grounded in reasonable data is its conclusion that Minnesota rideshare drivers earn more than $52 per hour of giving rides," a Lyft spokesperson remarked. "This study is dishonest, counterproductive, and a disservice to the goal of meaningful policymaking."
If the ordinance is passed into law, rideshare drivers would make at least $5 per ride and receive 80% of canceled rides.
Lyft claims that the pay hike would nearly double rates for passengers. The company urged customers to sign a petition opposing the ordinance.
The city council currently has the votes to override the mayor's veto and pass the measure into law. If Frey can convince one council member to switch his or her vote, his veto could not be repealed.
Council member Jason Chavez, who voted to secure driver raises, stated, "Small businesses are required to pay minimum wage before tips, and it's clear that multibillion-dollar out-of-state tech companies should be too."
"No company should be above the law. Relying on low-income riders to subsidize Uber and Lyft paying drivers' wages is an economic and racial injustice," Chavez added.
A recent statement from Uber read, "Uber supports comprehensive statewide legislation that guarantees drivers $35/hr minimum earnings while working and protects their flexibility and independence. If this ordinance is enacted, we look forward to working with drivers, riders and the legislature to bring rideshare back."
"The [City Council] hijacked a state process that proposed real solutions and is in the process of analyzing data to inform a workable earnings standard," Uber continued. "The state's task force made a series of recommendations that should be legislated and collected real data to come up with an appropriate minimum earnings standard."
Lyft noted that it is "committed to working with any stakeholders on a more sustainable and thoughtful policy solution, but if this particular proposal becomes law, it will force Lyft to cease operations in the City on May 1."
"We support a minimum earnings standard for drivers, but it must be done in a way that allows the service to sustainably and affordably operate for riders. For the second time in less than a year, the bill sponsors have willfully chosen to ignore offers to collaborate, instead choosing to rush through the most extreme figures possible," Lyft added. "We implore Mayor Frey to veto this legislation and instead join our efforts to pass a statewide minimum earnings standard that can balance the needs of all."
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