Chipotle has announced it will further hike prices in its California restaurants following the passing of a new bill that will increase the minimum wage of fast food workers in the state.
The Mexican restaurant chain reported on Thursday that its operating revenue had increased by 11% to $2.5 billion in the last quarter. The chain has blamed the law that will require fast food workers in California to be paid a minimum of $20 an hour for further price increases on top of another proposed hike.
In a call to investors on Thursday, Chipotle’s CFO John Hartung said the company had been “studying the situation” and “hadn’t made a decision” on pricing except that it was going to be a “mid to high single-digit increase” that Chipotle will “definitely pass this on” to the consumer.
The state’s current minimum wage of $15.50 an hour will increase to $16 on January 1.
Bill Set To Raise Half a Million Fast Food Workers Out of Poverty
According to the U.S. Bureau of Labor Statistics, California’s fast food workers currently earn an average of $16.60 per hour, which places them firmly below the poverty line in the state.
Chipotle, which has about 15% of its roughly 3,300 restaurants situated in California, currently pays its employees $17 an hour in the state.
As well as attempting to raise more than half a million fast food workers above the breadline in the state, the law also creates a Fast Food Council with the power to increase workers’ wages until 2029 by 3.5%, or the average increase in wages for clerical and urban workers, from the U.S. Consumer Price Index, whichever is lower.
President of the Service Employees International Union International, Mary Kay Henry, said the legislation is the culmination of 10 years of work, including 450 strikes by fast food workers in the past two years.
Jack in the Box employee Anneisha Williams held back tears as she spoke at a news conference before California Gov. Gavin Newsom signed the bill. The mother of six said: “They’ve been with me on the picket line, and they’ve been marching with me as well; this is for them.”
Speaking to CNN, Ms. Williams said the pay rise would help her cover bills, better provide for her children, and hopefully emerge from poverty; she is currently paid $17 an hour.
The new law, AB 1228, replaces the controversial FAST Recovery Act, which Newsom signed into law last year. However, large corporate chains, including McDonald’s, Chipotle, Chick-fil-A, and franchise advocacy groups, lobbied to repeal the law, arguing it would raise costs for fast food restaurants by $3 billion.
Source: CNN.