Chipotle and McDonald’s locations in California will be raising their menu prices next year to offset a minimum wage increase set to take place for many fast-food workers in the state.
Beginning next April, California fast-food workers will be making at least $20 an hour as a result of a compromise agreement reached by the industry and labor groups, according to CNBC.
McDonald’s CEO Chris Kempczinski told reporters that the company has not yet decided how much of a price increase its California customers are likely to see next year.
Chipotle’s Chief Financial Officer Jack Hartung told the press last week that while they have not yet made a final determination either, they expect to raise menu prices by a “mid-to-high single-digit” percentage.
Whereas the majority of Chipotle locations are owned by the company — giving them full control over menu prices — most McDonald’s locations are owned by franchisees.
Consequently, McDonald’s is only able to provide pricing guidance, as franchisees are ultimately free to set menu prices however they choose.
Kempczinski told the media last week that “there will certainly be a hit in the short term to franchisee cash flow in California,” although it is unclear at this time how big of an impact it will have.
According to reporting from CNBC, the wage increase will cost McDonald’s franchisees an estimated $250,000 annually.
The new independently enforced minimum wage will be applicable to chains with 60 or more locations nationwide.
In addition to the minimum wage hike, the agreement also established a nine-member council with the power to set a wage floor for the industry through 2029.
Between 2025 and 2029, the council will be allowed to raise the minimum wage each year either by 3.5 perent or the annual change in the consumer price index, whichever is lower.
Recently, legislators in Maine have been considering the implementation of state-mandated minimum wage hikes.
During the last legislative session, lawmakers approved of a bill raising the minimum wage to $15 a hour. It has since been placed on the Special Appropriations Table pending final passage and will be taken up again next year.
Originally, the bill contained language that, in addition to raising the minimum wage to $15 at the start of next year, would have mandated an annual increase of $1 through January 1, 2033. This therefore would have resulted in a minimum wage of at least $24 per hour at the start of 2033.
The amended version of the bill that was ultimately approved by legislators removed this language after receiving harsh criticism at its public hearing.
Legislators are now poised to consider yet another minimum wage bill when the reconvene next year.
Rep. Valli D. Geiger (D-Rockland) proposed a bill with the working title of “An Act to Change the Minimum Wage to a Living Wage.”
At this stage, no additional information is available concerning the potential contents of the bill. Consequently, specific policy implications of this bill are unknown at this time.
Importantly, it is not yet known how Rep. Geiger intends to define “living wage” for the purposes of this legislation.
More will eventually become known about the contents of the bill should it move forward in the legislative process.
The Maine State Legislature is scheduled to reconvene early next year, on Wednesday, January 3.