We Are Seeing The Effects Of The Minimum Wage Rise In San Francisco

In our weekly survey of ten of Chipotle’s markets, we found the company implemented price increases in half of the surveyed markets this week—San Francisco, Denver, Minneapolis, Chicago, and Orlando. In most markets, the price increases have been limited to beef and average about 4% on barbacoa and steak, toward the lower end of management’s expectation for a 4% to 6% price increase on beef.

• San Francisco, however, saw across-the-board price increases averaging over 10%, including 10% increases on chicken, carnitas (pork), sofritas (tofu), and vegetarian entrees along with a 14% increase on steak and barbacoa. We believe the outsized San Francisco price hike was likely because of increased minimum wages (which rose by 14% from $10.74 per hour to $12.25 on May 1) as well as scheduled minimum wage increases in future years (to $13 next year, $14 in 2017, and $15 in 2018).
A rough guide to the finances of the fast food industry is as follows. 30% goes on wages, 30% of revenues goes on ingredients and the other 40% is everything else. Rents, advertising, capital costs and, of course, profits. Those profits are pretty low. 5% of revenues isn’t an out of order estimation of the net profit margins in the business (and, of course, that’s an average, as some locations and some whole chains lose money).

So, if we by legislative fiat raise the price of one of those inputs then something, somewhere, has to give. Those profit margins are already pretty thin and so they’re not going to be where that extra cost comes from. More than that if we reduce the returns to capital in a particular line of business then less capital will be invested in that line of business in the future. This means fewer jobs in that line of business: This is one of the ways that a rise in the minimum wage destroys jobs. Fewer will be created in the future than would have been in the absence of the rise in the minimum wage.
So, if employers either economize on labor or profits, there will be job losses: the minimum wage rise does reduce employment.

Or there is this final method: raise prices. Which also causes job losses: for the more money that consumers are spending on reasonably priced Mexican food (although now less reasonably priced Mexican food than it used to be) the less they have available to spend on other things. We might think that there could be an interesting overlap between those who consume reasonably priced Mexican food and those who frequent comic book shops for example. If the food now costs more then there might well be less being spent in the comic book shop: again, we see reductions in the number of jobs.

There really is no such thing as a free lunch. Only lunches of variable cost. And if we increase the cost of one of the major inputs into such lunches then something else will give. Here, as a result of the rise in the minimum wage Chipotle has raised prices in that specific location where the minimum wage rise occurred.

Well, I am not surprised. Did the average person & all the poor, & legal & illegal immigrants & minority groups etc.. really BELIEVE they would be better off ?

I am sure that the people in San Francisco are happy to pay higher prices in exchange for a higher mandatory minimum wage.

I wonder if the price of gay wedding cakes will go up as well?

It is part of the scheme .. raise prices, have all the sub groups scream, let it spread, state state, make the increase mandatory nationwide.
Grateful subgroups = Democratic Votes

How do you know that it's the effect of the minimum wage and not just raising food prices? Especially with drought conditions?

Was the food price increase at Chipotle's compared to supermarket or vendor food price increases?
Because food at my market has been increasing significantly over the last year, few years.

It's more difficult to hide rising food prices in restaurants because they can't just relabel a burrito from 6 oz to 4 oz while using the same tortilla, like they can do with packaging at the store.


There can be.
Dine and dash.
It's called crime and getting away with it.
I'm thinking everyone just joins a gang.

Because the 2016 Election & Media


Riots/ Race

Church Murders / Race

Religion / Discrimination & persecution

Flag/ Race & avoid succession

Immigration/ Race

Illegal Alien crimes/ Race

Illegal guns/ ban all guns

Gay Marriage / Minority

Minimum wage/ Race- Minority



* Did I forget one of THE issues we are SUPPOSED to talk about ? *