Analytical firm Placer.ai has reported a decline in customer visits to fast food giants such as McDonald's, Wendy's, and Burger King since the law went into effect on April 1.

The study found that foot traffic at Burger King dropped by 3.86%, while Wendy's and McDonald's experienced decreases of 3.24% and 2.5%, respectively. Even In-N-Out Burger, a beloved fast food chain that recently raised menu prices to cope with rising labor costs, saw 2.59% fewer customers. Jack in the Box also witnessed a decline of 0.8% in customer visits.

R.J. Hottovy, head of analytical research at Placer.ai, stated, "It's early, but we're starting to see the ripple effect of the minimum wage increase across the broader restaurant industry." The increase in the minimum wage, from $16 to $20 an hour, has also been cited as a reason for the closure of dozens of Rubio's Coastal Grill locations and the recent Chapter 11 bankruptcy filing by the company.

The impact of the wage increase has extended beyond fast food chains. Foster's Freeze, another fast food establishment, had to shut down a location near Fresno as the franchise owner could no longer afford the upgraded salaries. The average rise in fast food prices in California over a six-month period before the law was enacted was 7%, forcing franchisees to reduce work hours, delay capital improvements, and introduce automation features like self-serve kiosks.

Interestingly, the Placer.ai report revealed that casual dining chains have seen a boost in visits as a result of the decline in foot traffic at fast food restaurants. Popular chains like Olive Garden and Chili's in California have experienced an increase in customer visits that surpasses the national average since the implementation of the minimum wage law. Olive Garden's customer visits in California rose from a 1% increase between February and March to 1.88% since the law took effect. Similarly, Chili's witnessed a rise in visits by 0.19% during the eight weeks spanning April and May.

Casual dining establishments have enticed customers with value meals, such as Buffalo Wild Wings' "all you can eat" wings promotion on Mondays and Wednesdays, which has proven successful in attracting patrons. Fast food companies had previously warned that increased labor costs would be passed on to consumers through higher menu prices.

In-N-Out, for instance, now charges $11.44 for a double-double burger combo in Los Angeles County – a $0.76 increase from last year. Meanwhile, at San Francisco's Fisherman's Wharf, the same combo with fries and a drink costs $13.63 after taxes, and customers must pay $7.50 for just the double patty itself.

A report by Kalinowski Equity Research released earlier this year found that several fast food chains, including Wendy's, Chipotle, Starbucks, and Taco Bell, raised their menu prices in anticipation of the new minimum wage law. Wendy's increased its prices by around 8%, Chipotle by approximately 7.5%, Starbucks by 7%, and Taco Bell by 3%.

The full impact of California's minimum wage hike on the fast food industry is still evolving, but the simultaneous rise in prices and decline in foot traffic at popular chains indicate the challenges presented by increased labor costs. As the industry continues to adapt to these changes, the fate of both fast food and casual dining establishments in the state remains uncertain.