John Phillips: California’s fast food follies
On April 1st, California’s brand new $20-an-hour minimum wage for fast food workers took effect, and surprise surprise fast food chains are jacking up their menu prices across the board.
According to data from Kalinowski Equity Research and cited in The New York Post, Wendy’s has hiked prices by roughly 8 percent, while Chipotle raised theirs by 7.5 percent, Starbucks went up by about 7 percent, Taco Bell by 3 percent, and Burger King increased theirs by 2 percent, the report found.
What’s next?
The McDonald’s drive-thru lane may have to start charging tolls.
Burger King could offer free estimates.
A lay-away plan at Wendy’s?
Also, Wendy has an OnlyFans page now.
Some franchises even raised their prices ahead of time, in anticipation of the new law.
Shane Paul, owner of seven Jack in the Box locations in San Diego, told Business Insider he raised prices by roughly 10-11 percent over the past six to 12 months, knowing the wage change was coming.
Similarly, one McDonald’s franchisee with 18 stores told CNN he raised his prices by 5-7 percent before the law took effect.
I guess we should count our blessings. At least America wasn’t experiencing record-breaking inflation when all of this nonsense happened.
Lynsi Snyder, the billionaire president of In-N-Out, was an outlier. She said she had to go “toe-to-toe” with top company executives to keep costs low.
“I was sitting in VP meetings going toe-to-toe saying ‘we can’t raise the prices that much, we can’t,’” Snyder said during an interview with NBC News’ TODAY and Morning News NOW. “I felt such an obligation to look out for our customer.”
Nonetheless, consumers are feeling the crunch and it’s already impacting their dining habits.
Brian Hom, who owns two branches of smoothie and Acai bowl chain Vitality Bowls in San Jose, told Business Insider that the price hikes could be scaring off diners.
“I’ve had some customers say: ‘the cost of going out is so high now, I’m looking to buy my own ingredients and make my own food at home because going out to a fast food has become a luxury’ versus ‘hey, I want to go get something to eat now,’” Hom said.
What I don’t understand is: Why is anyone surprised? Isn’t this the most obvious outcome?
Of course restaurants are going to pass their increased costs on to the consumer. Who did California Governor Gavin Newsom think would be paying for this?
Then again, Gavin Newsom doesn’t have a clue. His idea of fast food is DoorDash from The French Laundry.
This new reality will be particularly hard on the little guy, as major corporations have a leg up when it comes to transitioning from a human work force to one that is dominated by automation. Already, self-ordering kiosks and robotic kitchen equipment are transforming the fast food industry. As the price of labor goes up, more basic tasks will be taken over by robots and computers.
Drive-thru lanes will be totally automated as soon as McDonald’s develops a robot that can screw up a to-go order.
In fact, right now McDonald’s is trying to make their robotic food servers look more life-like. Some of them even have acne.
And, of course, more automation means more worker layoffs are on the way.
Just think about how different your experience is now when it comes to checking in for a flight or pulling money out of the bank, than it was years ago.
But more downsizing is coming.
California is the state that gave birth to the fast food industry, and now it looks like we may be the ones to tear down the Golden Arches, un-ring the Taco Bell and dethrone the Burger King.
John Phillips can be heard weekdays from noon to 3 p.m. on “The John Phillips Show” on KABC/AM 790.