- A new $20 minimum wage for fast food workers took effect in California on Monday.
- Some chains, like Starbucks, raised prices to cover increased labor costs.
Your coffee habit just got a lot more expensive if you live in California.
Across the state on Monday, a new law, AB-1228, went into effect after being signed by Gov. Gavin Newsom last September. In addition to creating a "Fast Food Council" to oversee labor issues across the quick-eats industry, the law also mandated a $20 minimum wage for fast-food workers at establishments with more than 60 locations nationwide, including favorites like Starbucks, McDonald's, and Pizza Hut.
At Starbucks, where each store is corporately owned, increased prices took effect as soon as the new law did, BI found.
Starbucks' Q4 results from last year revealed the chain's sales were up 8% in North America, and the company's net revenues rose 11% to a record $9.4 billion.
A roughly 15% price increase
BI found prices on Starbucks menu items increased from $0.50 to as much as $1.00 by comparing previous receipts to current prices.
A spokesperson for Starbucks confirmed to BI that prices in stores across California increased in response to the new minimum wage but declined to specify the average menu item increase.
So, let's assume you treat yourself to Starbucks each workday, and the price increase on your usual order is $0.80, or just over 15% of a $5.00 order, which BI found to be typical. Multiply that by 260 drinks, and you can now expect to pay $208 more a year for your daily indulgence — if you limit yourself to a single menu item. More if you're buying coffee more than five times a week or grabbing a snack with your drink.
Though the increase is meant to offset the higher labor costs — and Starbucks increased its salary floor across the board in California to prevent wage compression — it's hard for some regular drinkers to swallow the change, even if they agree their baristas should be paid more.
"It's so ridiculous, and I am slowly turning to my Nespresso machine to make my drink now," one California-based Reddit user posted about the April increase. "Shame on you, Starbucks."
Others lamented that their typical order increased by a dollar or more. And, while they're being paid more, the baristas are unhappy with Starbucks' choice to pass off higher labor costs to the customer, too.
Baristas bear the brunt
"As if we don't get harassed enough," a Starbucks barista posted on Reddit along with pictures of new signage reflecting the higher menu costs.
Representatives for Starbucks United, which represents unionized Starbucks employees, did not immediately respond to a request for comment from Business Insider.
Though the price hike may be inconvenient, one barista at a California Starbucks told BI it hasn't stopped his regular customers from placing their usual orders.
The barista, who spoke on the condition of anonymity because he was not authorized to speak publicly on behalf of the company, told BI that customers' reactions to higher prices so far have been "not great" and that some have been rude to the coffee shop employees as a result.
"They're surprised, and they get a little sad," the barista said. "But then they go ahead and order anyway."