Chipotle, McDonald's well positioned as fast food chains deal with California's rising wages

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Companies with strong sales momentum and branding power can weather the storm, while regional chains like Jack in the Box may struggle.

In California, the day marks the start of a new obstacle. Fast food chains that have at least 60 locations nationwide need to raise their minimum wage for restaurant employees to $20 per hour, up from $16, as the

"I think brands who provide a lot of value and have good traffic are best positioned," said Peter Saleh of BTIG, who pointed out that Chipotle's chicken bowl averages $9 across the country, compared to $12 to $13 for many burger meals."They've built quite a bit of momentum in their business with respect to traffic," Tower said.

Prices are already up 30% at quick service burger chains since 2019, capping how much more companies can charge now, particularly at chains that serve lower income customers. He told Yahoo Finance his stores have had "declining sales and traffic counts" so far this year, adding "it's the worst time" to increase prices. He's even considering selling off his locations in the state.

Joseph Bryant, member of the California Fast Food Council, claimed higher wages could lead to more jobs and higher profits. Or some individual operators may decide to fold. "I don't see anybody like going bankrupt tomorrow, but you're gonna see a lot of store closures," said Setyan.MONTREAL — Several Quebec Tim Hortons franchisees are taking the brand's owner to court, blaming what they describe as unreasonable constraints in the company's licensing agreements for lower-than-expected profits.

 

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