Who-d a-thunk it? SF minimum wage increased 14% and local Chipotles just raised prices by 10-14%?

American Enterprise Institute ^ | 7/8/15 | Mark J. Perry

[markomalley]

From an equity research report issued to investors by global investment banking and wealth management firm William Blair on Chipotle Mexican Grill, Inc. (NYSE: CMG) – “Price Increases Have Begun Early in Third Quarter” (received privately):

• 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).

Economic Lesson: TANSTAAFMWH, — “there ain’t no such thing as a free minimum wage hike.” Or to paraphrase David French, vice-president of the National Retail Federation, “There simply isn’t any magic pot of money that lets employers pay higher wages just because the government says so, without making adjustments elsewhere like cutting workers’ hours, reducing their non-cash fringe benefits, and/or passing the higher wages along to consumers in the form of higher prices.” After all, the minimum wage is not really a political problem, it’s a math problem. And the 10-14% price increases at Chipotles in San Francisco are just the new math problem now facing the restaurant chain’s customers, who’ll now be paying about $1 extra for each burrito bowl….

[markomalley]

I guess the lunatics running SF didn't consider that if everything costs more, then that dollar raise will actually put the "workers" farther behind than they were to begin with.

[SunkenCiv]

Thanks markomalley.

"...to paraphrase David French, vice-president of the National Retail Federation, "There simply isn't any magic pot of money that lets employers pay higher wages just because the government says so, without making adjustments elsewhere like cutting workers' hours, reducing their non-cash fringe benefits, and/or passing the higher wages along to consumers in the form of higher prices."

[mykroar]

And the 10-14% price increases at Chipotles in San Francisco are just the new math problem now facing the restaurant chain’s customers, who’ll now be paying about $1 extra for each burrito bowl….

Until the prices get too high and they don't sell as many bowls. And then they don't need as many people.....

[BobL]

But we were told that they would just ‘absorb’ it.

[central_va]

A burrito bowl is $10 to $14 per bowl?

[windsorknot]

SF is a no-fly zone for me.

[ThePatriotsFlag]

If I were running such a business, I’d put the surcharge right on the printed receipt..about a 2 minute software change.

[Labyrinthos]

I guess the lunatics running SF didn't consider that if everything costs more, then that dollar raise will actually put the "workers" farther behind than they were to begin with.

There is also a ripple effect that goes way beyond the minimum wage worker. Union negotiators use the minimum wage as a bench mark for negotiating union wages. If the minimum wage goes up 14%, then the unions will demand a 14% increase to maintain the gap between the minimum wage for "unskilled workers" and the union wage for semi-skilled and skilled union workers. Government and businesses beholden to the unions, end up paying more for union employees and services, and they pass the increase to taxpayers and consumers in the form of higher taxes, fees, and prices, leaving the average worker poorer than they were before the minimum wage increase.

[WinMod70]

I’m not in the food business but I have to think that there’s a fine line between making a profit and closing the doors. In my area Bob Evans just closed up 4 locations other places appear to be constantly changing hands. I can’t remember the last time I went to an actual sit down type joint for dinner. I suppose I could afford a night out once in awhile but I can’t justify spending the amount of money most places have to charge.

[bert]

you don’t understand....... inflation of wages and prices is absolutely necessary to provide the money working folk need to buy health insurance

Obamacare needs inflation to survive

the call went out in 2011 for increases. only now is there a glimmer of it happening

additionally, the general inflation weakens the $ and devalues the $18 trillion debt

[mykroar]

They’re a bit over $7 in Kansas, depending on the meat. I’m sure they’re at least a couple bucks more in SF - and it’d be close to a dollar - if not over.

[olezip]

Yes, but of course prices will rise 14%! That does not matter to the leftists that the overall quality of life will go down for the target population. The price rise gives leftists someone to blame while they go after another 15% raise.

The low information voters will continue to support the leftists until they run out of other people’s money.

[E. Pluribus Unum]

Isn’t that racist?

[Fiji Hill]

It wasn’t that long ago that a McDonald’s breakfast special consisting of an egg sandwich, hash browns and coffee cost less than three dollars. Now it’s more than five.

[Mastador1]

leaving the average worker poorer than they were before the minimum wage increase.

Not just the average worker, it screws every single person on a fixed income namely almost all seniors.