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White Castle Warns It May Hike Prices by 50 Percent to Cover Rising Minimum Wage

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Are those tiny burgers about to get more expensive?

Scott Beale/Flickr

Is the price of Harold and Kumar's favorite late-night snack about to skyrocket? A White Castle executive is warning that prices could go way up in light of impending minimum wage hikes in New York.

NYC's minimum wage will increase to $15 by 2018 (it's currently $9), with the rest of the state to follow by the end of 2021. Speaking to conservative news site National Review about the looming pay increases, White Castle vice-president Jamie Richardson says, "We’re disappointed. What this means for White Castle is we really have to evaluate how we manage our business ... We think we’d need to increase menu prices by something like 50 percent. It’s not something we’ve done before. It’d be catastrophic."

White Castle, which has more than 400 locations including more than a dozen in the NYC metropolitan area, is just the latest to express concern over how increasing labor costs across the country will affect business. Some companies have already elected to institute minor menu price increases to stay ahead of rising labor costs, including Shake Shack and Chipotle locations in San Francisco. Richardson worries "that if menu prices at fast-food chains shoot up by anywhere near 50 percent, many people will stop eating out as much, replacing trips to White Castle with trips to the grocery store."

But is White Castle's speculation about skyrocketing menu prices overblown? While an independent analysis conducted last year showed that minimum wage hikes would indeed "eat into restaurants' profits," a subsequent Purdue University study indicated a $15 minimum wage would lead to a 4.3 percent price increase at fast food restaurants, nowhere near the 50 percent figure that White Castle is throwing out. A Purdue professor noted that instead of raising menu prices, another solution might be for businesses to reconsider portion sizes — but those already-diminutive sliders can't get much smaller.

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