A staggering 98% of California fast-food restaurants have raised menu prices in response to the state’s new $20-an-hour minimum wage law, and nearly 90% have cut employee hours, according to a new study.
The study, by the Employment Policy Institute, a fiscally conservative nonprofit think tank, surveyed 182 fast-food restaurant owners across California about the impact of the law, which was signed by Democratic Governor Gavin Newsom and took effect on April 1.
The survey, conducted in June and July, found that not only have nearly all restaurants increased their prices, but 93% plan to do so again next year. The survey also found that 87% plan to cut employee hours in the next 12 months, down slightly from the 89% who said they have cut hours this year.
Nearly three-quarters (73%) of fast-food restaurants reported reducing shift rotation and overtime opportunities for employees, and 70% reduced staffing or combined positions.
“Even before the $20 hourly wage went into effect, it was clear that fast food restaurants would not survive, but now, just a few months later, the policy has been a spectacular failure, with jobs being lost and restaurants closing,” said Rebecca Paxton, research director at EPI.
Meanwhile, 67% of respondents said the new law would cost restaurants at least $100,000 per restaurant, and 26% expected losses of $200,000 per restaurant.
When asked if the new minimum wage law would make them reconsider expanding their business in California, 73% said it would make them “significantly less likely” to expand in the state.
Nearly three in four people (74%) said they think restaurants are likely to close, according to the survey.
The move to raise wages has prompted several major chains, including McDonald’s, Burger King and even low-cost favorite In-N-Out Burger, to raise prices or cut hours to offset rising labor costs.
Others, including popular Tex-Mex chain Rubio’s California Grill, have also closed 48 locations, citing “rising costs of doing business.”
A spokesman for Gov. Gavin Newsom told The Washington Post, “This is a fake online survey run by a Washington lobbying firm and funded by corporate restaurant chains — all to protect their profits.”
“Federal data shows the real facts: fast food industry employment has grown every month this year, including after California increased its minimum wage for workers,” the spokesperson said.
Last week, fast food workers across the state called for a further increase in the minimum wage.
of California Fast Food Workers Union The fast-food chain, a chapter of the Service Employees International Union (SEIU), announced the new list of demands at the inaugural meeting of the state’s Fast Food Council.
In a statement to the outlet, SEIU said the union is calling for workers’ hourly wages to be increased to $20.70 by Jan. 1, 2025 “to address the rising cost of living.”
As a result of the law, popular chains like McDonald’s, Wendy’s and Burger King saw a sharp decline in traffic.
Since April 1, Burger King’s customer traffic has fallen 3.86%, Wendy’s has fallen 3.24% and McDonald’s has fallen 2.5%. According to a report from analytics firm Placer.ai:.
In-N-Out Burger’s customer numbers were down 2.59%, while Jack in the Box’s customer numbers were down 0.8%.
