98% Of Fast Food Owners Raised Prices After $20 Minimum Wage Spike, Survey Says

CALIFORNIA — Restaurants are raising prices and cutting hours and staff in the wake of California’s $20 fast food minimum wage, with more of the same expected in the next year, according to a recent survey of operators.

The Employment Policies Institute, described by Influence Watch as a right-leaning research organization focused on employment growth, surveyed 182 California fast-food restaurant operators during June and July, following the April 1 start date for the new minimum wage, up from $16 per hour to $20.

Of those surveyed, 98 percent said they had already raised menu prices due to the wage spike, while 89 percent cut worker hours and 70 percent reduced or consolidated jobs. Within the next year, 93 percent said they would have to increase prices, 87 percent said they would need to reduce hours, and 74 percent said they would have to cut or consolidate jobs.

“Unfortunately for California limited-service restaurants, 92 percent of owners think that raising menu prices will adversely affect customer foot traffic,” according to the institute.

Eighty-nine percent of operators said they are less likely to expand in California with the higher minimum wage and 74 percent said the likelihood that they would close their restaurants had increased.

Roughly two-thirds of respondents said the law will cost their business at least $100,000 per location.

The minimum wage law appears to have sent a complex series of ripples across the industry.

Fast food job growth in the state has slowed but not stopped in the wake of the wage increase, according to The Center Square, which reported that in May 2023 the industry added 19,100 jobs year-over-year, while in May 2024 it added 3,000. Fast food employment in Southern California reached a record high in June, Southern California News Group business columnist Jonathan Lansner reported.

And while the operators surveyed confirmed they had raised prices, many popular chains across the state have been promoting $5 meals this summer.

The impact of higher wages may not be over. Despite the recent pay spike, California's fast food union is seeking to increase the minimum wage for its workers to $20.70 per hour in January to cover the rising cost of living, KTLA reported.

“The vast majority of fast-food locations in California operate under the most profitable brands in the world,” Service Employees International Union International Executive Vice President Joseph Bryant said in a prepared statement. “Those corporations need to pay their fair share and provide their operators with the resources they need to pay their workers a living wage without cutting jobs or passing the cost to consumers."