Many restaurants raised menu prices after California’s minimum wage hike, survey finds

SAN DIEGO (FOX 5/KUSI) — After the minimum hourly wage for fast food workers in California increased from $16 to at least $20, customers may have noticed that prices for their favorite dishes at some restaurants have also increased.

A new law mandating a $20 hourly wage for fast-food workers in California went into effect April 1. Since then, many restaurants have raised menu prices or reduced staff hours in response to the wage hike.

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A survey conducted by the Employment Policies Institute in June and July examined the impact of California’s minimum wage increase for fast-food workers on 182 restaurant operators in the Golden State. The survey was conducted online via email to a list of limited-service restaurant operators as well as partner associations with restaurant members.

According to the survey results, 67% of restaurant owners said the wage increase would cost their business at least $100,000 per location. About one in four said it would cost more than $200,000 per location.

The majority of restaurants reported already raising menu prices (98%), reducing employee hours (89%), limiting overtime or opt-out opportunities (73%), and reducing staff or consolidating positions (70%). Many restaurants said they would consider taking similar actions in the coming year.

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At the same time, 92% of respondents expressed concern about the negative impact that increasing menu prices could have on the number of customers visiting their restaurants.

The minimum wage increase for fast food employees has also affected owners’ thoughts on expansion, with 73% of respondents saying they are less likely to expand in California and 59% saying they are more likely to look for growth opportunities outside the state.

In late May, more than a dozen Rubio’s Coastal Grill restaurants closed in San Diego County, along with 35 other “underperforming” restaurants in California. The restaurant cited “the increasing cost of doing business” as a driving factor in the closures.

The minimum wage increase is just one of many factors weighing on the restaurant industry. Several restaurants across the country have closed due to inflation following the COVID-19 pandemic and significant staffing shortages.

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