Starbucks, Chipotle, McDonald’s: Who’s raising prices in California to pay higher wages

Fast Break

Karen Garcia March 28, 2024 You’re Your

next burrito bowl might cost you more than $12 thanks to a California law that’s significantly increasing fast-food workers’ wages next month, a cost increase that

big chains like Chipotle say they could pass along

to consumers.

During an earnings call in February, Chipotle’s chief financial and administrative officer Jack Hartung

warned

, “To cover the cost of the wage increase, we would need to take a mid-single-digit price increase in California.”

The law, Assembly Bill 1228, was signed by Gov.

Gavin

Newsom in September and takes effect

April 1 Monday

. It requires restaurants corporate- and franchise-owned with 60 establishments nationwide to bump their California-based workers’ pay to $20 an hour

starting April 1

, $4 higher than the overall state minimum wage of $16 an hour.

Though Chipotle has not yet announced a final decision on new pricing,

many other

household favorites chains

like McDonald’s, Starbucks and Jack in the Box say they

are also

planning to push that increase onto consumers or change their operations. The law

will also called for the creation

of

create

a restaurant industry council

that will to

set future pay raises and advise on working conditions.

Here are the fast-food favorites that are hiking their prices or changing how they operate.

McDonald’s

There won’t be a uniform price change in the McDonald’s menu items because corporate-owned and franchise locations will be making different modifications to their menus.

A spokesperson for McDonald’s told The Times

,

the company was exploring several ways to counterbalance the increase in labor costs and has yet to decide how much it will raise the price of the menu items at its corporate-owned stores.

At franchise locations, which account for 95% of the brands U.S. portfolio, McDonalds provides informed pricing recommendations but final pricing is at the discretion of franchisees, the spokesperson said.

Starbucks

Coffee aficionados can expect an uptick in their caffeine drink

s costs

,

however but

Starbucks hasn’t disclosed when or how much it will increase

its

prices.

The company elected to increase wages for all employees regardless of their level of experience, a spokesperson told The Times.

Pizza Hut

Pizza prices won’t

see an

increase, but two Pizza Hut operators in the state eliminated in-house delivery

, forcing their local customers

to rely on third

–

party apps.

The operators laid off more than 1,200 drivers to reduce staff ahead of the implementation of Assembly Bill 1228, Business Insider reported

.

“Where select California franchisees have elected to make changes to their staffing approach, access to delivery service will continue to be available via Pizza Huts mobile app, website and phone ordering and the customer ordering experience will remain consistent,” said Chelsea Mack, spokesperson for the company

, in an email to The Times

.

Round Table Pizza

Round Table Pizza’s owner, Excalibur Pizza, said

in a Worker Adjustment and Retraining notification, a 60-day written notice of forthcoming layoffs,

that it planned to eliminate 73 driver positions by mid-April. The most recent state WARN report shows the company served 71 layoff notices.

The change will

shift

Round Table delivery options to third-party service providers. Round Table Pizza told

The Times

that it saw the layoffs as a “transfer of jobs,” as workers will be needed for the third-party delivery services,

where they are typically employed as contractors without many worker protections or benefits.

“That said, delivery service fees may increase, and the customer will most likely see even higher prices as a result of this ongoing shift,”

said a Erin Mandzik, spokesperson for Round Table Pizza. “Operators are doing their best to retain staff and keep doors open, that is what it really comes down to.” In regard to any price changes, that’s up to the franchisee, but the Round Table Pizza franchisor is helping its operators maintain its margins. “Whether that is devising a value-drive limited time offers, providing strategic guidance on menu pricing, or providing costs of goods savings with our significant purchasing power, we are in the thick of it with our operators,” Mandzik said. Auntie Anne’s and Cinnabon

Alexander Johnson is a franchisee of several locations of Auntie Anne’s and Cinnabon in California. Johnson operates five locations of each business in the Bay Area and said

t

he wage increase is making him consider layoffs and

closingclos e

some locations, ABC 7 reported.

Among the drawbacks, Johnson said it would also mean he would have to raise prices.

It’s unclear whether the pretzel or cinnamon pastry locations under Johnson’s purview will definitively increase their prices and when.

Jack in the Box Your favorite

Jack in the Box menu items could see a hike

increase as well

. During recent earnings calls,

the chain’s

CEO Darin Harris stated the company would depend on

upward

price adjustments, expecting me

n

u prices to increase

from

6% to 8%, Nasdaq reported.

The Times reached out to Jack in the Box for comment, but did not receive a response before publication.

Times staff writers Andrea Change and Don Lee contributed to this report.