California businesses are expected to hike menu prices when minimum wage boosts to $20 an hour this spring.
Last fall, the Golden State passed legislation to require $20 per hour as a minimum wage for all restaurants in the state.
Several fast-food restaurants, including McDonald’s and Chipotle, are expected to raise menu prices due to the increased worker pay in their budgets.
McDonald’s is already coming under fire for numerous consumer complaints on TikTok about menu items skyrocketing in price. Some social media users have complained about seeing an inflated cost of the Big Mac meal, costing around $18. Its iconic Dollar Menu no longer provides any substantive menu item for just $1.
McDonald’s CEO Chris Kempczinski said this week that the restaurant company will strive for “affordability” in its goals for customers.
However, in a recent Fox Business television interview, one food executive doesn’t see how any of these restaurants can lower menu food costs while employee wage costs are rising.
“Everyone wants their employees to make more money, but it just costs. And someone’s got to pay for it. And the restaurant operators don’t have the margin for that. So prices are going to go up,” Fat Brands Chairman Andy Wiederhorn said on Tuesday.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Wiederhorn said it’s not possible to lower prices for customers and maintain the quality of the product.
“A restaurant operator makes anywhere from 5% to 15%, the bottom line at the end of the day, and if your labor cost is one-third of your cost, so 30%, and you raise the wage from 15 to 20 or $25 over the next couple years, you’re almost doubling that cost. And so they’re going to have to raise prices,” he added.
