Of all the issues surrounding the fast food industry, wages have long been among the most contentious flash points. For decades, fast food companies like McDonald's have sworn up and down that they couldn't possibly afford to raise wages while at the same time seeking to automate jobs. These efforts (including, at one point, a burger-flipping robot) have not panned out -- perhaps because if it were possible for McDonald's to save money by automating its workforce, it would have already done so. Now, the chain is finally preparing to pay its California workers the new state-mandated $20 minimum wage. Since the average McDonald's wage in California for cashiers appears to be around $15, it's likely to be a relatively significant increase.
The company isn't simply paying up, though. As a means of ostensibly protecting its bottom line, McDonald's is also raising menu prices. This comes after fast food companies increased prices by 13% in 2022. While fast-casual chain Chipotle is contemplating hiking prices by "mid-to-high single digits," according to CNBC, McDonald's hasn't commented as to how much more expensive its food is going to get.
McDonald's Believes It Can Benefit From The Wage Hikes
On September 28 of this year, a bill was signed into law that raised the minimum wage for fast food workers to $20 per hour -- an agreement that goes into full effect in April of 2024. It ended a months-long dispute over the future of fast food wages, resulting in a compromise whereby a nine-person council has the power to set the pay floor at McDonald's through 2029.
Interestingly, in the long term, the fast food chain appears to believe the increase in both wages and prices could benefit the company: on a conference call, CEO Chris Kempczinski said, "We believe we're in a better position than our competitors to weather this, so let's use this as an opportunity to actually accelerate our growth in California." He may be right; as the most profitable fast food chain in America, McDonald's may indeed be able to withstand the wage hikes more easily than its competitors.
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