In-N-Out Burger Is Out of Oakland

California restaurant chains are continuing to try to manage the state’s big minimum wage increase. Last week Rubio’s Coastal Grill announced it was closing 48 stores, in part because of the wage hike.

Rubio’s described those restaurants as underperforming so they seem to have been on the bubble before the wage hike. Today we’re learning that one of California’s most successful chains, In-N-Out is also raising prices despite having suggested they wouldn’t do so just a couple months ago.

After The Fast Act went into effect on April 1, which raised the minimum wage from $16 an hour to $20, In-N-Out president Lynsi Snyder said they would not increase their prices.

“I was sitting in VP meetings going toe-to-toe saying, ‘We can’t raise the prices that much, we can’t,” Snyder said in an interview with Today on April 9. “Because I felt such an obligation to look out for our customers.”

But as of today, prices are going up. The company’s flagship burger combo is over $13 in some areas of the state once you add tax.

At the Fisherman’s Wharf location in San Francisco, a double-double with french fries and a drink now costs $13.63 after taxes, an In-N-Out spokesperson confirmed to KRON4…

In-N-Out confirmed that the price hikes are directly related to the minimum wage hike. A spokesperson did not say when exactly the new prices went into effect.

Things are slightly better in Los Angeles:

As for the recent price bump, a Double-Double combo in Los Angeles County now costs $11.44, up $0.76 from last year.

People outside California might find it hard to understand just how popular this chain is here. There are three stores within a 10 minute drive of my house. All three will have a long line of cars at the drive-thru (often trailing into the street and all through the parking lot) plus a significant number of people inside anytime around lunch and dinner. It’s crowded like this seven days a week but especially on the weekend. I have personally waited 40+ minutes in an In-N-Out drive-thru line on a weekend night when I drew the short straw to do pick up for the family.

These places just print money for the company and their success is based on a few things. First, despite the lines, the service is usually quick and the staff of young people are never grumpy to be there. Second, the food is very fresh and very good. Fries are made from fresh potatoes as you order, not shipped frozen to the stores. Third, the prices are good. A full meal at IN-N-Out always seemed to be a dollar or two cheaper than a similar meal at McDonalds.

Maybe that’s still the case as I’m sure McDonald’s prices in California are also going up. But McDonald’s has a lot of franchised restaurants that make their own decisions about price increases. In-N-Out has no franchisees so price increases will show up across the board any time they are made.

It’s just one more sign that the decision to raise wages (in this case to $20 an hour for fast food restaurants) inevitably trickles down to customers in the form of higher prices. At some point, even In-N-Out could struggle to hold onto customers if those prices get too high.

Here’s the interview with the company’s current president. She didn’t exactly vow not to raise prices, she just said she pushed back on the idea. Ultimately, I guess she lost that battle.

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