LA Fatburger restaurants raising prices as California increases minimum wage
LOS ANGELES - You might have to pay more for your burger and fries at some fast food restaurants across California (if you aren't already) as companies look for ways to offset costs ahead of a California law mandating the increase of the state's minimum wage for fast food workers come April.
Marcus Walberg, who owns four Fatburger franchises in Los Angeles, told Business Insider the menu prices at his restaurants have already gone up, and he's also cut down employees' hours because of the new law.
"I feel that there will be a lot of pain to workers as franchise owners are forced to take drastic measures," he told Business Insider.
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The current minimum wage in California is $16 per hour and will increase to $20 in April. The move comes after the passing of AB 1228, which was proposed in the wake of the rising cost of living and most fast-food workers living at or below the federal poverty line. The bill stated the high cost of living prompted "the urgent and immediate need to provide fast food workers a living wage."
Walberg told the outlet he'd hike up prices as much as 10% at his four restaurants when the law goes into effect April 1. Last year, he had implemented a 8% menu-price increase.
"It’s a scary thing because customers are already complaining that prices are too high," Walberg told the outlet.
Walberg is also saving money by trimming employees’ hours, he told Insider, in addition to eliminating the paid-time-off programs at his franchises "to prepare for the increase in wages in 2024."
"We’re not hiring new people to fill jobs," he said. "We’re being very tight on schedules."
Fatburger isn't the only fast food restaurant finding ways to implement cost-saving measures ahead of the impending law.
Last year, McDonald's and Chipotle executives said they will raise menu prices this year in California to offset the minimum wage increase.
Around the same time, Pizza Hut announced it would lay off all its delivery drivers at all California franchises as the chain braces for the minimum wage increase.
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The decision affects Pizza Hut locations in Los Angeles, Orange, San Bernardino, Riverside, and Ventura counties.
File photo of a Fatburger neon sign at night in Los Angeles, 2015. / Getty Images (Getty Images)
Moving forward, the California Pizza Hut franchises will rely on third-party delivery apps like Uber Eats, GrubHub and DoorDash for deliveries.
As part of the law, a nine-person council was established that has the authority to raise the hourly minimum wage annually for the fast-food industry, through 2029. The council will adjust wages by either 3.5% or the annual change in the consumer price index.