California’s headline-grabbing minimum wage increase went into effect on April 1, ensuring pay of at least $20 per hour for all fast-food workers across the state. 

The $4-per-hour increase for this group of workers at chains with at least 60 locations nationwide has led to reports of employee hours reductions and shuttered locations. 

But it has also led to a widespread increase in menu prices, according to an analysis by Datassential. 

Using our Price Monitor solution, Datassential has found that menu prices for limited-service restaurants (incorporating both fast-food and fast-casual operators) in California have risen notably at a pace faster and more significant than anywhere else in the country since the announcement. 

In an effort to exclude one-off price hikes or special menu introductions, the analysis only considered items that returned to a menu in the months prior to the law’s enactment (Sept. 28, 2023) and through the month after the wage’s effective date (April 1.)

Here are a few key findings:

• In April, after the law went into effect, many large chains raised prices widely and steeply in California, while keeping prices steady elsewhere in the U.S.
• Among the chains raising the most prices in California last month were Raising Cane’s, which raised prices on 93.7% of returning items last month in California with an average increase of 7.7%, Blaze Pizza, which increased 80.4% of returning item prices in the state with an average price increase of 10.1%, and Chipotle, which raised prices on 85% of returning menu items in California last month with an average increase of 7.1%.
• California led the nation in menu price inflation from September 2023 to April 2024 with a menu price inflation rate among limited-service restaurants (LSR) of  10.1 percent.  
• The percentage of LSR menu items with a price increase was higher in California than the total U.S. in all but one month from May 2023 to April 2024. 
• Between September 2023 and April 2024, all of California’s 30 area codes ranked among the highest limited-service menu price inflation area codes across the country.
• The area code 442, which covers the southeastern part of California, had the highest net LSR menu price inflation among limited service restaurants in the same six-month period, at 12.5%.

Full-service restaurants in California – which includes sit-down restaurants from midscale chains to fine-dining, raised menu prices at a far more moderate pace in that six month period, although it still exceeded other states. Net menu price inflation for full-service restaurants in all other states between September and April was 3.1%, while California full-service menu prices rose by 4 percent. 

When looking at the percentage of full-service menu items with price increases, California only topped the national average about half the time between May and April (6 out of 12 months.) 

DOWNLOAD EASY-TO-READ TABLES BROKEN OUT BY:

California vs. Total U.S.

• Percentage of menu Items with an increased price, by month 
• Average % price increase, by month
• Percentage of total price increase, by month
• Net inflation, Sept. 2023-April 2024 

Nationwide

• Menu price inflation by area code
• Net menu price inflation by state

By Chain

• Price adjustments in California vs. other states in April 2024

Media resources & citation notes

Reporters may reach out to our media team anytime at media@datassential.com. 

When citing the data, please refer to Datassential as a global food and beverage intelligence company. And when possible, include a link to this post. 

Methodology

This analysis was conducted using data from Datassential’s Price Monitor tool, which leverages AI to standardize and code menu items to give restaurant companies an unparalleled view of price variations across menu items, locations over time, and in comparison to local competitors. Price Monitor analyzes approximately 90% of menu items from more than 70 chains.

For more information on Price Monitor, request a demo.