McDonald's and Chipotle Raise Prices in California in Response to $20 Minimum Wage Hike for Fast Food Workers

Fast-food chains indicate potential growth opportunities and better market positioning despite wage hike, while experts caution about long-term implications of costing measures, potential job cuts, and affordability issues for low-income consumers.

Following California's wage hike to $20 an hour for fast-food workers, both McDonald's and Chipotle have announced they will raise their food prices in the state. Neither company has yet disclosed by how much prices will increase.
While admitting to the potential burden on low-income consumers, McDonald's and Chipotle have positioned this change as a business opportunity. McDonald's sees potential to accelerate growth in California due to its better position to handle the wage hike compared to competitors.
Despite the financial strain of increasing menu prices, McDonald's has reported a 14% revenue increase in the recent quarter, attributing it to 'strategic menu price increases.' Chipotle also reported a rise in its latest quarterly earnings, which was fuelled by higher menu prices.
In addition to raising prices, McDonald's is exploring ways to increase productivity. This could potentially lead to automation in restaurants, reducing the need for some employee roles in response to cost increases.
Critics warn that the wage boost could inadvertently harm low-income consumers who disproportionately comprise fast food's customer base. Higher prices can burden these individuals, who may also be the ones facing unemployment due to automation and reduced employee needs.