To Offset California Wage Hike, McDonald’s Brings Bagels Back

By: Georgia | Published: Apr 16, 2024

McDonald’s has reintroduced bagels in California, possibly in response to the state’s new $20 minimum wage for fast-food workers. 

Bloomberg suggests that reintroducing bagels is a strategic move within a broader effort by McDonald’s to address the financial implications of wage increases.

Meet the "Rise and Dominate" Team

Bloomberg reports that following the wage increase, McDonald’s has assembled a special task force named “Rise and Dominate.” 

An exterior view of a McDonald's restaurant with a modern design. The McDonald's name is prominently displayed in large white letters on a dark grey facade. Beneath the name, large windows reflect the urban environment

Their mission is to craft strategies that will absorb the higher wage costs, with bagels being reintroduced as a crucial component of this initiative.


Aiming to Draw Crowds

McDonald’s aims to boost visitor numbers across its California locations with the reintroduction of bagel breakfast sandwiches. 

A close-up view of a McDonald's bagel breakfast sandwich with egg, cheese, and a sausage patty, wrapped in branded paper with pink donut graphics

Source: Wikimedia Commons

The company believes these beloved items will draw more customers and help sustain profitability despite the wage hikes.

A Blast from the Past

Introduced in 1999, McDonald’s breakfast bagels delighted customers with their tasty combination of egg and protein until their removal from the menu in 2020. 

A meal from McDonald's featuring a bagel sandwich with egg, lettuce, and a beef patty, served in an open cardboard box. Next to it is another bagel sandwich with sesame seeds on top. Accompanying the sandwiches are potato wedges, condiment packets, and a drink cup

Source: Wikimedia Commons

Now, they are making a return, rekindling old favorites after several years.

Big Bucks in Advertising

McDonald’s is investing $15 million in advertising in California, highlighting the significant challenges posed by the wage increase. 

The iconic McDonald's sign with the golden arches illuminated against a twilight sky showing hues of blue and purple

Source: Jurij Kenda/Unsplash

This major investment in state-specific marketing illustrates the strategic shifts McDonald’s is implementing in the Golden State.

United for a Common Cause

McDonald’s revealed their proactive strategy in a statement to The New York Post: “In response to California legislation, McDonald’s stood up a dedicated team of staff and franchisees to co-invest and work collaboratively on an action plan to help operators drive sales, grow share and increase restaurant profitability.” 

The exterior of a McDonald's restaurant at night, showing the glowing signage with the iconic golden arches. The restaurant has large windows revealing the bright interior, and customers are visible inside and in the parking area

Source: Faisal Mehmood/Unsplash

This unified effort is crucial to navigate through economic hurdles.


Global Insights for Local Strategies

McDonald’s is leveraging successful tactics from global markets to manage wage increases. 

A close-up of a McDonald's meal spread on a table, including a box of French fries, a box of Chicken McNuggets, packets of condiments, a wrapped sandwich, and a peach-flavored frozen drink in a clear cup

Source: Wikimedia Commons

The company is focused on deploying innovative, sustainable solutions that ensure long-term prosperity and continued service to stakeholders.


The Costly Side of Compliance

A franchisee group disclosed to Bloomberg the severe impact of the wage increase, describing it as a “devastating financial blow” and estimating an additional cost of $250,000 per location. 

Inside a McDonald's restaurant, employees wearing uniforms and face masks are working behind the service counter

Source: Visual Karsa/Unsplash

This significant increase in operating expenses is a major concern for franchisees across the state.


A Law with Wide Reach

The wage law, AB-1228, affects fast-food chains with more than 60 locations nationwide, including industry giants like Starbucks and Pizza Hut

A brightly lit sign for Starbucks Coffee is visible from a darkened street perspective. Below the sign, the interior of the café is softly illuminated, showing patrons sitting at tables

Source: June Andrei George/Unsplash

The new law aims to improve worker conditions but carries significant financial implications for affected businesses.


Pricing Dilemma

Franchisees, who operate about 95% of McDonald’s outlets in the U.S. and set their own prices, are worried that raising prices to cover higher wages might result in losing customers. 

A tray containing McDonald's French fries in a red carton, a wrapped McDouble burger, and a soft drink cup with a Coca-Cola logo. Packets of ketchup are also on the tray

Source: Alia/Unsplash

Balancing operational sustainability with competitive pricing is a delicate task.


Bagels as a Business Strategy

McDonald’s USA stated, “Reintroducing Bagel Sandwiches, a longtime fan-favorite, earlier this year is an example of one traffic-driving lever we’re pulling in California.” 

Three different McDonald's breakfast bagels are displayed, each featuring eggs, cheese, and a choice of bacon, sausage, or a plain option

Source: McDonald’s/Facebook

This strategy is designed to attract more customers and manage the economic impact of the wage increase effectively.


Bagels Beyond California

Although the wage increase is specific to California, the demand for bagels has prompted their availability at McDonald’s locations nationwide

A street view of a McDonald's restaurant situated in a residential area with multistory buildings in the background

Source: Wikimedia Commons

The online menu features various bagel options, from California to New York, reflecting strong customer demand for these breakfast items.