Soaring Prices Mean Fast Food is Now a Luxury in California, Franchisee Says

By: Georgia | Published: Apr 19, 2024

In California, fast food prices have increased significantly, leading some customers to view these meals as luxury items. 

A local franchisee mentioned, “Some diners now think fast food is a ‘luxury’ as prices creep up.” This shift is partly due to wage increases and other economic factors impacting the fast food industry.

The Ripple Effect of Wage Increases

To keep up with California’s new $20 minimum wage for fast food workers, eateries across the state are bumping up their prices, NBC Los Angeles reports.

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A chicken sandwich with pickles on a bun, accompanied by waffle fries and a drink with a red logo, served on a tray inside a fast-food restaurant

Source: Wikimedia Commons

This isn’t just about higher wages—it’s a broader trend of labor and wage inflation pushing costs higher, reshaping how restaurants operate financially during and after the pandemic.

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Diners Feel the Pinch

Brian Hom, owner of two Vitality Bowls locations in San Jose, hears it straight from the source.

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Exterior view of Vitality Bowls Superfood Cafe, showing a signboard with neon green letters advertising Acai Bowls, Smoothies, Juices, and Wraps

Source: Vitality Bowls/Facebook

He said that his customers are feeling the squeeze: “I’ve had some customers say: ‘the cost of going out is so high now, I’m looking to buy my own ingredients and make my own food at home because going out to fast food has become a luxury.'”

A New Budget Balancing Act

With prices on the rise, fast food lovers are rethinking their dining habits. 

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A woman wearing a yellow beanie and blue jacket is smiling while eating a slice of pizza and holding a dipping sauce in a car

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Hom said, “They have to think twice: ‘Am I going to be able to afford it or not?'” This financial stress is reshaping how customers decide when and where to eat out.

A Nationwide Trend

California’s price spike isn’t an isolated case.

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Close-up of a person biting into a sesame seed burger with cheese, lettuce, and tomato, focusing on the sandwich and the person's hands

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Across the U.S., fast food costs have climbed due to wage hikes and ingredient costs during the pandemic, hitting consumers’ wallets harder than ever before.

Price Tags Under Pressure

According to Hom, his eateries have adjusted their pricing not once, but twice this year to cope with wage changes.

Two hands holding cups of Vitality Bowls Acai, one topped with bananas and strawberries, the other with coconut, chocolate chips, and berries

Source: Vitality Bowls/Facebook

“My two stores had already changed their prices twice this year,” he explains, a direct response to local and statewide economic pressures.

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Testing Customer Loyalty

Scott Rodrick, who runs 18 McDonald’s franchises in Northern California, highlights a crucial concern, saying “The appetite that my customers have for price increases is not unlimited.”

A close-up view of a gourmet burger with a sesame seed bun, melted cheese, bacon, and onions, suggesting a freshly prepared fast-food meal

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Franchisees like Rodrick are wary of pushing their customers too far with high prices.

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Casual Dining Gains an Edge

As fast food costs edge closer to those of casual dining, more consumers are weighing their options.

A plate of fried chicken tenders and fries with side dishes of coleslaw and dipping sauces, with a person holding a chicken tender, a beer glass, and a Corona beer pack in the background

Source: Wikimedia Commons

Why grab a quick meal when for a bit more, you can relax at a sit-down restaurant? This shift could redefine competitive dynamics in the dining industry.

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Home Cooking on the Rise

Business Insider explains that higher dining out costs are also driving more folks to cook at home.

Close-up of a person's hands chopping fresh cilantro on a wooden cutting board in a bright kitchen setting, with a clear jar of herbs and other vegetables in the background

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The trend is clear: as fast food becomes a pricier option, supermarkets and kitchen stoves are becoming more appealing, likely impacting fast food sales across the board.

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Reassessing Fast Food's Value

Tony Nix, a cybersecurity consultant and regular diner, captures the sentiment perfectly.

A hand using a pizza cutter to slice a hot pepperoni pizza with melted cheese stretching, served on a wooden table with a sprig of oregano as a garnish

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He said, “Fast food is generally supposed to be a less expensive alternative than going out to a sit-down restaurant. But it’s not becoming that at all. It’s becoming as expensive, if not more.”

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The Wage Impact on Spending

California’s decision to raise fast-food wages to $20 an hour was meant to better support workers.

A chef with tattooed arms is intently preparing a sandwich with a side of sweet potato fries on a wooden counter in a professional kitchen

Source: Jesson Mata/Unsplash

However, this has led to increased menu prices, prompting consumers to rethink how they allocate their dining dollars.

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What's Next for California's Fast Food?

With the economic landscape shifting, both consumers and fast food operators in California are facing new realities.

A box of golden-brown chicken nuggets from McDonald's sitting on a wooden surface, indicating a quick and familiar meal option

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The evolving scene suggests significant changes in how fast food fits into everyday life, with affordability and value becoming ever more critical.

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