The Californian Government has introduced a new $20 minimum wage for all fast-food workers in the state. However, this comes with some worries from management as they might need to raise the prices of their products to meet up with the fees.

The state of California has set a new standard with its new bill for a $20 minimum wage for fast-food staff. This is significantly higher than that of the general state minimum wage of $12-15.
The law is called AB 1228, and it affects fast food chains all over the country in at least 60 different locations.

As the wages have risen, the owners of these fast food franchises have no other choice but to change some of their business strategies to fit the new pricing.
Scott Rodrick, the owner of 18 McDonald’s restaurants in Northern California, said, “I’ve got to look at every option for business survivability.” This means that moves like expanding delivery operations and major investments will have to wait for a while now.

Without a doubt, the fast-food business has been growing technologically for years. However, most of these food chains still value human input above all else.
“In the world of McDonald’s, human beings make hamburgers, human beings smile at customers in the drive-thru, human beings build Happy Meals,” Rodrick explained. Therefore, it is clear that they want to maintain the human element at their branches.

Due to the difference in locations and laws, the prices of fast food meals vary. This is also affected by things like operational costs and consumer purchasing power.
For example, a Happy Meal on Uber Eats for a McDonald’s in Sacramento, California, ranges from $7 to $8.60. Some places charge as low as $5 in some rural areas.

As inflation continues to rise, costs of production for fast food are rising too. Therefore, most of these chains have no choice but to adjust their menu prices. McDonald’s CEO Chris Kempczinski also mentioned that inflation is leading to a rise in the cost of the items on the menu. Sadly, dining at McDonald’s, which used to be a random thing, has now become a sort of luxury for many.

McDonald’s is not the only fast food chain affected by this increase in wages. Many other franchises are struggling with the increase and the financial implications on their business. For example, Alex Johnson. The owner of multiple Auntie Anne’s Pretzels and Cinnabon restaurants revealed that an increase in employee wages would force him to raise the prices of their products.

Scott Rodrick is concerned about increasing the menu prices, keeping in mind what customers are willing to pay. An increase in wages will most likely result in an increase in prices of food. “We have looked at the price, although I can’t charge $20 for a Happy Meal,” he said.
“My customers’ appetite to absorb menu-board prices is not unlimited.”

The different franchises are now exploring all the strategies they can to accommodate these operating costs. For Rodrick, he is expanding delivery services to get more money. “I’ve got to be aggressive in seeking labor-efficient growth,” he said.
He would also be postponing things like significant capital expenditures. This way, they are trying to move towards more sustainable practices that will save costs.

The battle for higher wages has been going on for years. Fast-food workers and their unions have been fighting this long battle, and now they are winning. “We are in this fight because workers are worth more, and our families deserve better than poverty wages,” said Angelica Hernandez. She is a cook trainer at McDonald’s and a member of the Fast Food Council.

The change in prices of fast food items shows how the economy affects these fast food chains. Therefore, places that have a higher class or wealthier population tend to have higher prices. The cost of living and operational costs add or remove an extra dollar when they want to sell to their customers in different locations.

Thanks to the new $20 minimum wage for fast-food workers, these businesses have to reevaluate their prices. They also have to review their efficiency and business models going forward. Therefore, owners like Rodrick and Johnson are back to the drawing board. They have to make some difficult decisions to accommodate the new change.

One thing Rodrick is sure of is the importance of humans in his organization. “While we have relied far more today on technology than ever before, it’s not supplanted the importance of human beings in the workplace,” he said.
Therefore, his commitment is entirely to his workers, and he plans to make the necessary accommodations for them.