Sticker Shock in California

Higher state minimum wage went into effect April 1; chains say burritos and burgers are getting more expensive in response.

The Wall Street Journal reports California Fast-Food Chains Are Now Serving Sticker Shock

Since September, when California moved to require large fast-food chains to bump up their minimum hourly pay to $20 in April, fast-food and fast-casual restaurants in California have increased prices by 10% overall, outpacing all other states, the firm found in an analysis of thousands of restaurants across 70 large chains.

Prices at Chick-fil-A, Domino's, McDonald's (MCD) Burger King (BKC), Pizza Hut (YUM), Jack in the Box (JACK ) and other fast-food chains have increased since September, the firm found. Chipotle (CMG) said in an investor call Wednesday that prices at its nearly 500 California restaurants climbed 6% to 7% during the first week of April compared with last year, playing out across its menu.

"The state isn't making it easy," Chipotle Chief Executive Brian Niccol said in an interview.

In Los Angeles on a recent April afternoon, Seth Amitin, a 39-year-old therapist, said his usual $16 meal that he picks up weekly at the Chick-fil-A in Hollywood, Calif., now costs $20. The price for a spicy chicken sandwich at that location had gone up to $7.09 from $6.29, or 13%, since mid-February, according to research by Gordon Haskett Research Advisors. Chick-fil-A's prices increased 10.6% on average in California during that time period, Gordon Haskett found.