Greg LaVay, a 79-year-old retired entrepreneur from San Diego, says he used to visit McDonald’s a few times a month — but recently decided to switch to sit-down restaurants for dinner instead.
Why? LaVay noticed the price of hamburgers in his area inching up to $2.50 apiece, with a Big Mac going for $5.39 today.
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“I feel ripped off a little,” he told The Wall Street Journal.
Since September’s ruling that California fast food franchisees would be required to increase its minimum wage for employees to $20 starting in April, several eateries have embarked on cost-cutting measures such as raising menu prices.
A recent analysis from market research firm Datassential reveals the Golden State’s fast-food and fast-casual restaurants, like McDonalds, Chick-fil-A and Pizza Hut, have lifted prices by about 10% overall since September. This growth far surpasses that of the U.S. as a whole, which has seen chains inflate prices by just over 5%.
California franchisees hiking menu prices
Several fast food chains have said they’re raising menu prices in response to the minimum wage hike.
Kalinowski Equity Research says menu prices at some restaurants have escalated by as much as 8% since the beginning of April, with Wendy’s leading the pack, reports NBC Los Angeles.
In a recent earnings call, Chipotle reported a 6% to 7% menu price increase at its California establishments in April in light of the recent increase. And Gordon Haskett Research Advisors found Chick-fil-A’s prices jumped 10.6% on average in California since mid-February, according to The Journal.
However, a spokesman for California Gov. Gavin Newsom told The Journal fast food chains can afford to give their workers a raise.
“These are wages that will go towards basic necessities like rent and groceries,” he said.
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Customers are opting for smaller, independent eateries
California’s wage law doesn’t apply to establishments with less than 60 national locations, so smaller, independent restaurants aren’t impacted by the higher labor costs.
As a result, some customers are turning to small neighborhood businesses for lower prices.
Seth Amitin, a 39-year-old therapist based in Los Angeles, told The Journal he saw his usual $16 meal that he picks up once a week at a Chick-fil-A in Hollywood get hiked up to $20.
“There’s a really good taco spot just down the street. They kept their burrito prices at $10. I’m definitely eating there more often,” Amitin said.
John Matthews, a 62-year-old project manager from Imperial Beach who shells out about $600 a month to eat out, has also decided to frequent independent, sit-down restaurants instead of big chains like McDonald’s and Chipotle.
“I’m still eating out, though much more selectively,” Matthews told The Journal.
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