Effective April 1, 2024, many limited-service restaurant operators (also referred to as “fast food” or “quick-service” restaurants) in California are required to pay employees a minimum wage of at least $20 per hour. The law that increased this limit also allows for future increases to the quick service minimum wage based on recommendations of a Fast-Food Council. While those subject to the law may be affected, other limited-service operators may also experience effects, such as being forced to raise wages as high as the new law to match their competitors.

To better understand the impact of increasing the minimum wage for California’s limited-service restaurant employees, a survey of 182 limited-service restaurant operators in California was conducted in June and July 2024.

Key Findings: As a result of the new fast food minimum wage law,

• A majority of respondents (67%) say it will cost their restaurant at least $100,000 per location. One in four (26%) say it will cost more than $200,000 per location.
• A majority of restaurants say they have already raised menu prices (98%), reduced employee hours (89%), have limited employee shift pick-up or overtime opportunities (73%) and reduced staff or consolidated positions (70%).
• A majority of restaurants say in the next year they will have to raise menu prices (93%), reduce employee hours (87%), reduce staff or consolidate positions (74%), and limit employee shift pick-up or overtime opportunities (71%).
• Many (75%) say the number of employees will decrease (somewhat decrease, 50%; significantly decrease, 25%).
• Nearly all (99%) say prices will increase with 73 percent saying they will “significantly increase.”
• Ninety-two percent of owners think that raising menu prices will adversely affect customer foot traffic (somewhat decrease, 34%; significantly decrease, 58%).
• Eighty-nine percent of owners say they are less likely to expand inside California (somewhat less likely, 16%; significantly less likely, 73%).
• Many (59%) say they are more likely to expand outside of California (somewhat more likely, 13%; significantly more likely, 46%).
• A majority (74%) say there is an increase in the likelihood of shutting their restaurants down (somewhat increase, 38%; significantly increase, 36%).