Earlier this year, we examined the impact of California’s minimum wage increase for foodservice workers, where a 25% increase in the minimum wage to $20 per hour led to menu price increases for many chains and ultimately had a negative impact on visitation trends across the QSR sector (and may have benefitted the casual dining sector).
We thought we’d revisit the topic now that we have a few more months of data to work with. Below, we’ve presented te year-over-year change in visits for the QSR category nationwide compared to California. Year-over-year nationwide QSR visits outperformed California by a little more than 90 basis points during April-June 2024, but this gap narrowed to 10 basis points in July-August 2024. (Note: we’ve updated our analysis to include data from Data Version 2.1, which utilizes an enhanced dynamic debiasing model that improves accuracy.)
Initially, it appeared that the gap might be narrowing because California consumers were adjusting to the menu price increases that went into effect in April. However, a closer examination of the data indicates that it’s more nuanced than that, and like so many things in the QSR category, it can be traced back to McDonald’s. Below, we’ve presented year-over-year change in visit trends for McDonald’s nationwide versus California. From April-June 2024, McDonald’s California underperformed the rest of the country by almost 2.5% with respect to year-over-year change in weekly visits. However, this gap narrowed considerably upon the release of McDonald’s $5 Meal Deal in late June (which has now been extended into December) and reversed when McDonald's launched its Collector’s Meal promotion on August 13.
Looking at visitation trends for other QSR burger chains like Burger King and Wendy's, we see that year-over-year visitation trends in California still lag the rest of the country by a wide margin. Overall, QSR burger chains with the exception of McDonald's continue to greater visitation pressures from recent menu price increases in the state.
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