Fast food is a convenient and affordable option for many people, especially those who live in busy urban areas or have limited time and resources to cook. However, fast food lovers in California may soon have to pay more for their burgers, fries, and pizzas, as the state is implementing new regulations that will affect the industry.
Minimum Wage Increase
One of the main reasons why fast food prices are expected to rise in California is the minimum wage increase that will take effect on January 1, 2024. According to the California Department of Industrial Relations, the minimum wage for employers with 26 or more employees will increase from $15 to $16 per hour, while the minimum wage for employers with 25 or fewer employees will increase from $14 to $15 per hour. This means that fast food workers, who are typically paid at or near the minimum wage, will see a boost in their income, but also that fast food employers will face higher labor costs.
Some fast food chains, such as McDonald’s, have already announced that they will raise their menu prices to offset the wage increase. According to Business Insider, McDonald’s franchisees in California have increased their prices by an average of 6% in December 2023, ahead of the minimum wage hike. Other fast food chains, such as Taco Bell and Jack in the Box, have also indicated that they will adjust their prices accordingly.
COVID-19 Safety Measures
Another factor that will contribute to the higher cost of fast food in California is the ongoing COVID-19 pandemic and the safety measures that are required to prevent the spread of the virus. According to the California Department of Public Health, fast food restaurants and other food service establishments must follow certain guidelines to protect their employees and customers, such as:
- Limiting indoor capacity to 50% or less, depending on the local risk level
- Ensuring physical distancing of at least six feet between tables and customers
- Requiring face masks for employees and customers, except when eating or drinking
- Providing hand sanitizer and disinfecting wipes for customers and employees
- Cleaning and sanitizing frequently touched surfaces and equipment
- Screening employees for symptoms and testing them regularly
These measures, while necessary to prevent the spread of COVID-19, also impose additional costs and challenges for fast food operators, who may have to invest in more equipment, supplies, and staff training. Moreover, these measures may also reduce the demand for fast food, as some customers may prefer to avoid dining out or opt for delivery or takeout options instead.
Environmental Regulations
A third reason why fast food prices are likely to increase in California is the environmental regulations that the state has enacted to combat climate change and reduce pollution. According to the California Air Resources Board, the Low Carbon Fuel Standard (LCFS) is a program that requires transportation fuel providers to reduce the carbon intensity of their fuels by 20% by 2030. This means that fuel providers must use more renewable and low-carbon fuels, such as ethanol, biodiesel, electricity, and hydrogen, to power their vehicles.
The LCFS, while beneficial for the environment, also affects the fast food industry, as it increases the cost of fuel for fast food delivery and supply chain vehicles. According to a study by the California Energy Commission, the LCFS could increase the average gasoline price by 13 cents per gallon and the average diesel price by 15 cents per gallon by 2030. This means that fast food operators will have to pay more for their transportation costs, which may be passed on to their customers.
Conclusion
Fast food in California is about to get more expensive due to a combination of factors, such as the minimum wage increase, the COVID-19 safety measures, and the environmental regulations. These factors will increase the costs and challenges for fast food operators, who may have to raise their menu prices to stay profitable. Fast food customers, on the other hand, may have to pay more for their favorite meals, or look for alternative options that are cheaper or healthier. Fast food in California, once a cheap and convenient choice, may soon become a luxury that many people cannot afford.