Californians have long ago gotten used to — and accepted, based on voting patterns — paying more for gas than the rest of the nation due to Democratic policies, and they will likely start paying the most for a Big Mac.
Gov. Gavin Newsom signed into law in September a minimum wage increase for fast-food workers at restaurants with at least 60 locations nationwide, increasing the hourly wage to $20 effective on April 1, 2024, Fox Business reported.
“Today, we take one step closer to fairer wages, safer and healthier working conditions, and better training by giving hardworking fast-food workers a stronger voice and seat at the table,” the Democratic governor said at the time.
On an earnings call Monday, McDonald’s CEO Chris Kempczinski warned that the law is going to have “a wage impact for our California franchisees.”
“I don’t think at this point, we can’t say exactly how much of that is going to work its way through pricing,” Kempczinski said.
“Certainly, there’s going to be some element of that that does need to be worked through with higher pricing,” he added. “There’s also going to be things that I know the franchisees and our teams there are going to be looking at around productivity. How all of that plays out, there will certainly be a hit in the short term to franchisee cash flow in California; tough to know exactly what that hit will be because of some of the mitigation efforts.”
The CEO expressed confidence that McDonald’s will fare better than its competitors.
“Longer term, what we’ve been talking about with our franchisees is this is an opportunity for us to gain share because this is an impact that’s going to hit all of our competitors. … We believe we’re in a better position than our competitors to weather this,” he said.
California currently has the highest minimum wage in the nation at $15.50 an hour, which will bump to $16 an hour in January for all jobs in the state, according to Fox Business.
In calling the new law a “big deal,” Newsom dismissed the notion that fast-food jobs were never expected to support a growing family and that the intended workforce is teenagers just entering the workforce.
“That’s a romanticized version of a world that doesn’t exist,” Newsom said back in September. “We have the opportunity to reward that contribution, reward that sacrifice and stabilize an industry.”
Ironically, Business Insider cited Kempczinski to report that McDonald’s “isn’t as cheap as it once was, and it’s losing low-income customers” while realizing “an uptick in traffic among ‘middle- and higher-income consumers’ who are trading down.”
“So I think we’re just going to need to continue to keep a close eye on that $45,000-and-under consumer because of the pressure that they’re feeling there and make sure that we’re offering value,” the CEO said.
The news of a possible price spike in California went over like a ton of bricks online… here’s a quick sampling of responses to the story from X:
California doesn’t care.
— Myers Alva (@tizintest) October 31, 2023
It will hurt the poor more than anyone. That’s the biggest irony.
— Brad Paine (@BradPaine5) October 31, 2023
Not to mention the lower and middle class, who they claim to care so much about. Can they afford a $20+ meal for lunch?
— Home Master (@DanBlass1) October 31, 2023
No kidding, no one is going to pay $15 for a $5 Big Mac or quarter pounder. They will either have to raise their prices to unsustainable levels or they will have to cut labor costs. That will mean layoffs and reduce service availability to the customer.
— Thom Bradley (@ThomBradley8) October 31, 2023
Now, the milk shake machines will never get fixed.
— Dude_Ohio (@dude_ohio) October 31, 2023
Mcdonalds prices are too expensive now anyways. They raised them too high. Used to be a good value.
— James Anderson (@JamesAndersonX7) October 31, 2023
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Tom Tillison grew up in Maryland before moving to Central Florida as a young teen. It is in the Sunshine State that he honed both his passion for politics and his writing skills. Tillison also contributes to BizPac Review.
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