California Sees Highest Fast-Food Price Hike in U.S. with 7% Increase Ahead of $20 Minimum Wage

By: Georgia | Published: Apr 20, 2024

Fast-food lovers in California have had to start paying more, as prices surged by 7% over just half a year. 

This spike in prices is linked to the state’s minimum wage increase to $20 an hour, compelling many fast-food owners to rethink how they run their businesses—from slashing work hours to speeding up the shift to self-service kiosks.

Leading the Nation in Price Jumps

With the steepest increase in fast-food menu prices nationwide, California is feeling the effects of the minimum wage rise from $16 to $20, which began on April 1

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As Datassential’s findings show, the jump in labor costs is significantly affecting consumer spending.

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Tough Choices for Fast-Food Franchisees

As the new minimum wage approaches, fast-food franchisees throughout California face difficult decisions. 

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Business Insider reports that they are reducing work hours, delaying upgrades, and deploying self-service technology more rapidly to manage rising costs and maintain efficiency.

A Widespread Trend Across the States

Topping the charts with a 7% increase, California’s price hike is echoed by a national trend. 

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Washington State and Kentucky follow, witnessing increases of 6.1% and 6% respectively, compared to a national average of 4.5% over the same period.

Statewide Impact on Prices

More than just a handful of locations, every area code in California is experiencing higher fast-food prices, landing them among the top 30% of increases nationwide. 

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The wage increase has affected the entire fast-food industry within the state.

Northern California Hits a Record High

Experiencing unprecedented menu price inflation at 8.9%, the 530 area code in Northern California reports the highest increase nationwide.

A close-up of a half-eaten fast food burger with sesame seeds on the bun, revealing layers of beef patty, cheese, lettuce, and sauce. The burger rests on a paper wrapper inside a fast-food restaurant

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Such an increase indicates significant economic shifts in the area.

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Significant Hikes in Riverside County

In Riverside County, where the 951 area code includes places like Coachella, fast food is becoming pricier.

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Here, the increase is the seventh-highest in the nation at 7.9%.

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Price Surges in Stockton and Oakland

In Stockton and Oakland, covered by the 209 and 510 area codes, fast-food prices have risen to 7.9% and 7.8%, respectively. 

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These regions are now among the top ten in the nation for fast-food price inflation, illustrating the broad impact of the trend.

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Southern California Also Affected

Continuing the pattern, Southern California sees notable increases in the 916 and 442 area codes.

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Hikes of 7.6%, places these areas 13th and 14th nationally and illustrating the extensive statewide economic pressure.

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Upscale Dining Also More Expensive

Not confined to fast-food outlets, full-service restaurants across California have also raised their prices by 3.3%.

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This marked the third highest increase nationally after Hawaii and Washington State, as tracked by Datassential.

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Big Names in Fast Food React to Wage Changes

Industry giants such as Wendy’s, Chipotle, Starbucks, and Taco Bell are proactively adjusting their prices in response to the wage increase. 

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Wendy’s has upped its prices by approximately 8%, while Chipotle has increased by about 7.5%, as per data from Kalinowski Equity Research.

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What’s Ahead for California's Fast Food?

Navigating through these pricing adjustments, the fast-food sector in California is undergoing significant changes. 

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The full effects of these shifts are still unfolding, showcasing how extensive legislative changes in labor costs are reshaping the state’s economic landscape for fast food.

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