McDonald's says fast food sales are suffering most in California

• McDonald's says fast food sales are suffering most in California.
• McDonald's raised menu prices in CA to offset the state's $20 minimum wage for fast-food workers.
• "It was a piece of very lopsided legislation that was targeting one industry," Kempczinski said.

McDonald's CEO says fast food sales are suffering in California as menu prices increased to offset the state's $20 minimum wage for fast-food workers.

"You're seeing in California, the business there is falling off to a greater degree than what you're seeing in other markets around the US," CEO Chris Kempczinski told CNBC's Squawk Box.

"We've had to do everything in the playbook , basically, in California, from finding productivity opportunities in the restaurants, looking at staffing, looking at hours , and then, yes you do have to look at pricing ," he said.

California raised the minimum wage for workers at limited-service restaurant chains with at least 60 locations to $20 an hour in April.

Before this, the state's minimum wage of $16 an hour had applied to them, though many cities and counties within California had set higher minimums.

"I think what happened in California, I hope, is a unique situation," Kempczinski told CNBC. "It was a piece of very lopsided legislation that was targeting one industry."

McDonald's did not respond to Business Insider's request for further comment.

The fast-food industry lobbied intensively against the legislation, warning that the higher wages would force some restaurants to lay off workers. McDonald's was one of the companies opposing the bill , with Joe Erlinger, the president of McDonald's US, calling it "costly and job-destroying."

Some fast-food chains have laid off workers in California , including in some cases by closing restaurants, partly in response to the new legislation.

The $20 minimum wage was introduced to support workers in a state with a notoriously high cost of living . The fast-food industry, particularly, is characterized by low pay, long shifts, and irregular schedules.

However, the industry is facing a wider slump in sales. McDonald's global comparable sales dropped by 1% in the second quarter, which Kempczinski said on Monday was because the company hadn't focused enough on value. Customers are being more discerning about where they spend their money , and some are cooking more at home instead.

Are you a restaurant franchisee in California? Email this reporter at gdean@insider.com.