California residents will pay the price at Chipotle Mexican Grill locations across the state when a new state law will soon take effect. The law, which goes into effect in April, raises the minimum wage for California fast-food workers to $20 an hour, up from the current $15.50 an hour rate. The state-wide minimum wage for all other jobs will rise to $16.
Based in Newport Beach, the company has already increased its prices by 3% last month — the first nationwide price hike in over a year. Chipotle’s average state-wide wage ranges between $17 and $18 an hour.
According to a press release, total revenue for Chipotle’s third quarter increased by a little over 11 percentage points from last year, generating $2.5 billion.
The company’s Chief Financial Officer Jack Hartung said the new law will raise overall labor costs for Chipotle by 2.5% to 3% in California, where approximately 15% of Chipotle’s restaurants are located according to The Wall Street Journal. Chipotle boasts over 3,000 locations and 100,000 employees worldwide.
Chipotle said they were monitoring how consumers respond to the price lift and — though they currently do not have plans to — might close down certain California locations if customers are not receptive to the increased prices.
Several USC students, who frequent the two Chipotle locations on Hoover and Figueroa Street in proximity to campus, said the food is already expensive as is. The new law may deter them from visiting Chipotle more often.
Maxine Hoffman, a freshman in Viterbi, said, “The cost of things in California, the cost of living… all of that is already extremely expensive.”
Liam Adams, a freshman studying international relations, said, “I feel, personally, that a lot of the money is going to a select few instead of the workers already.”
Another freshman, Jack Miller, also wondered if the price hike is the best solution for Chipotle. “Should that be a load that the consumer has to pay or should it be the load of the higher-ups?”