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McDonald’s Reintroduces Bagels to Offset California Wage Hike

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McDonald’s Reintroduces Bagels to Offset California Wage Hike
Source: Pinterest

McDonald’s Reintroduces Bagels to Offset California Wage Hike

Source: Pinterest

Fast food restaurant, McDonald’s, is reintroducing its famous bagels into its menu. This is in a bid to accommodate the new California wage hike.

McDonald’s History

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The very first McDonald’s restaurant dates as far back as the 1940s. The brothers Maurice and Richard McDonald started the business as a drive-in. However, they revamped it in 1948 as a restaurant to make high-quality food at cheaper prices. Today, it is one of the most famous restaurants in the world with multiple locations worldwide.

The Wage Law

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California has introduced a new wage law, AB-1228, which stipulates a $20 per hour wage for fast-food workers. This affects fast-food restaurants with more than 60 locations nationwide. This also includes industry giants like Starbucks and Pizza Hut. It aims to help to improve the finances of workers in the restaurants and in turn, improve their working conditions.

The "Rise and Dominate" Team

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In order to meet the new wage standards, McDonald’s has assembled a special in-house task force named “Rise and Dominate,” according to Bloomberg. The mission of this special team is to craft strategies that will absorb the higher wage costs, helping the company to meet its requirements.

Strategies to Draw Crowds

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One of the first moves by the special team was to bring back the famous McDonald’s bagel. This aims to boost visitor numbers across the different branches in California. The company believes that this comeback will draw many customers and increase income to balance the wage hikes. This is not the first time a fast-food restaurant has made this type of decision.

Reintroducing the Bagels

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The McDonald’s breakfast bagels were introduced as far back as in 1999 and they were a huge hit with crowds. The customers enjoyed their tasty combination of eggs and protein with a nice bun. However, they removed it from the menu in 2020. After four long years, they are back on the menu and ready for customers to buy again.

Bagels as a Business Strategy

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

Investing in Advertising

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McDonald’s is investing a huge sum of money in advertising in California to draw in more customers. A huge sum of $15 million will be used to highlight significant challenges that the wage increase will cause. However, they will only use this funding in California, highlighting the state-specific changes that the restaurant is making.

United for a Common Cause

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McDonald’s revealed this proactive strategy that creates a unified effort to navigate the economic hurdles. A statement to The New York Post read, “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.”

Global Insights Implemented in Local Strategies

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The various tactics and strategies implemented by McDonald’s team are on a global level. The team is using successful strategies that worked globally to try to increase their income to match the new law. Therefore, they are focusing on innovative and sustainable solutions to ensure that they are successful and able to meet the increased impact that the law has created.

The Cost Implications

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As fast food restaurants comply with the law, it is also costing them a lot of money. A franchisee group disclosed to Bloomberg that the wage increase has dealt a “devastating financial blow” to them. An estimated additional cost of $250,000 per location is being incurred by each branch. Therefore, they have to increase their income rate significantly to match the wages.

Pricing Variations

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Another big issue the fast food restaurants are facing is pricing. The franchisees who operate about 90% of McDonald’s outlets in the U.S. set their own prices. Therefore, those in California are worried about raising their prices and losing customers as a result of that. They are striving to find a good balance between sustainability and competitive pricing.

Bagels Beyond California

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Although the wage increase is specific to California, the demand for bagels has prompted their availability at McDonald’s locations nationwide.
The online menu features various bagel options from California to New York, reflecting strong customer demand for these breakfast items.