Chipotle says California's minimum wage pushed menu prices up nearly 7 percent
Chipotle increased menu prices by about 7% because of the minimum wage increase in California.
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- The effects of California's $20 minimum wage for fast food workers are starting to show.
- Chipotle said the law raised wages at its restaurants by roughly 20%.
- This translated to a 7% menu price increase at Chipotle locations in California.
California's $20 wage for fast food workers is just a few weeks old, and the effects on workers and customers are beginning to emerge.
At Chipotle, the law drove a 20% increase in wages for its restaurant staff in the Golden State, the company said during its earnings call on Wednesday.
To offset that cost, menu prices notched up about 6% to 7% for customers in California, CEO Brian Niccol said.
CFO Jack Hartung added that the average ticket in California before the increase wasn't all that different from other states, even though the cost of doing business there is generally higher than other areas of the US.
Chipotle is based in California and has 475 restaurants there, representing about one-eighth of the company's total count.
"After the increase, we still have burritos that are going to be reasonably priced," Hartung said. "That chicken burrito is gonna be around $10."
Still, he added that it's a bit early to see the real effect on customer behavior.
And, of course, Chipotle is not the only restaurant chain trying to figure out the math to make the new rule work.
Hartung said the company is passing on less of the cost to consumers than its competitors.
"We still think we offer a great value here," he said. "As the consumer figures out how do they want to balance their budget, we think Chipotle will stay in their budget."