A McDonald’s franchisee who owns 18 restaurants in Northern California said he has been forced to raise menu prices in response to the state’s new $20-an-hour minimum wage law for fast food workers — though he will resist raising the prices of Happy Meals.
“We have looked at price, although I can’t charge $20 for a Happy Meal,” Scott Rodrick, who owns Rodrick Management Group, told CNN on Monday.
In the last three months, Rodrick has raised menu prices between 5% and 7% in anticipation of the new law going into effect.
“As a business owner, when you’re dealing with this kind of extraordinary overnight change, you know, a 25% increase in wages,… (no) stone has to remain unturned,” Rodrick told CNN.
Rodrick said that he would refrain from cutting worker hours.
Instead, he will seek to expand the delivery operations.
The new law has also forced Rodrick to rethink large capital expenses.
He will postpone renovating the dining room and hold off on plans to buy new grills and rooftop HVACs.
“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 said.
“And while we have relied far more today on technology than ever before, it’s not supplanted the importance of human beings in the workplace, I’ve just been able to reallocate where they work within the restaurant.”
McDonald’s locations offer three choices of a Happy Meal — one with a hamburger as the main entree with a side of french fries and a kid’s drink that consists of either milk, chocolate milk, water or juice.
The other two offerings include 4 piece Chicken McNuggets and a 6 piece Chicken McNuggets meal.
The price of Happy Meals and other menu items vary from location to location.
Internet reports indicate that the range of prices for Happy Meals is between $4 and $8.
Some locations in wealthy areas such as Fairfield County, Conn. are charging around $18 for a Big Mac meal which consists of a Big Mac sandwich, french fries and a soft drink.
Another McDonald’s restaurant in Connecticut was charging diners $7.29 for an Egg McMuffin and $5.69 for a side of hash browns.
In February, McDonald’s CEO Chris Kempczinski admitted that inflation would compel the fast food chain to raise menu prices.
Kempczinski also acknowledged that dining out at McDonald’s was becoming a luxury that fewer people could afford.
“Eating at home has become more affordable,” Kempczinski said. “The battleground is certainly with that low-income consumer.”
Before the California minimum wage law went into effect, Chipotle also warned that it would have to raise menu prices.
The law was supported by the trade association representing fast food franchise owners.
But since it passed, many franchise owners have bemoaned the impact the law is having on them, especially during California’s slowing economy.
Alex Johnson owns 10 Auntie Anne’s Pretzels and Cinnabon restaurants in the San Francisco Bay Area.
He said sales have slowed in 2024, prompting him to lay off his office staff and rely on his parents to help with payroll and human resources.
Increasing his employees’ wages will cost Johnson about $470,000 each year.
He will have to raise prices anywhere from 5% to 15% at his stores, and is no longer hiring or seeking to open new locations in California, he said.
“I try to do right by my employees. I pay them as much as I can. But this law is really hitting our operations hard,” Johnson said.
With Post wires
