03/28/2024

California Restaurants Raise Prices to Offset Historic Salaries of their Employees

Chipotle CFO says they will definitely pass the expense on to consumers

Chipotle, McDonald’s, Jack in the Box, Shake Shack and Starbucks are planning to raise menu prices. Fast-food franchisees are laying off employees or cutting their hours. Smaller independent business owners, meanwhile, worry their workers will bolt unless they also increase wages.

With California’s mandatory minimum wage for fast-food workers set to jump to $20 an hour on Monday, restaurant chains are scrutinizing every aspect of their businesses to find ways to offset the extra money they will soon be spending on labor. In many cases, customers will end up eating the cost.

“It’s going to be a pretty significant increase to our labor,” Jack Hartung, Chipotle’s chief financial officer, said of the new law during the company’s third-quarter earnings call. He estimated that the burrito chain would boost prices by “a mid-to-high single-digit” percentage as a result. “We are definitely going to pass this on.”

Please select this link to read the complete article from Yahoo! Finance.