Apr 12, 2024 - Business

Why bagels are back at some McDonald's restaurants

McDonald's sign in front of a restaurant

McDonald's breakfast bagels are back at some California restaurant locations. Photo: Justin Sullivan/Getty Images

McDonald's restaurants in California have brought back the fan-favorite breakfast bagel after a four-year hiatus in what it calls a plan to offset the impact of the fast-food workers' wage hike.

Why it matters: McDonald's, which posted revenues of $6.4 billion in the fourth quarter of 2023, said the experiment is meant to help California locations drive sales and increase profits as they adjust to the state's new $20 an hour minimum wage law.

  • The new pay requirement began April 1.

The big picture: McDonald's confirmed to Axios that a team of staff and franchises worked together on the plan and gathered best practices from around the world where municipalities have managed wage increases.

  • The fast-food chain said restaurants will pilot innovative short and long-term solutions for California. Bagels are one part of the plan.

Zoom in: Bloomberg reported Friday that a McDonald's franchisee group estimates the impact of California's mandatory pay bump could cost each location $250,000 without mitigation strategies.

  • McDonald's is also spending $15 million on local advertising, Bloomberg reported, noting it is rare for the company to promote products in one state.

Between the lines: Ian Borden, McDonald's chief financial officer, said during a February earnings call that the company expected wage inflation to be in the mid- to higher single-digit range.

  • "Part of that is because of the impact of what we're going to have to work through in California," Borden said.

Flashback: Bagels were removed as a national offering from McDonald's menu in April 2020 at the start of the pandemic when U.S. restaurants transitioned to limited menus.

McDonald's breakfast bagels return 2024

What we're watching: McDonald's bagel sandwiches are back at all participating California restaurants and the company told Axios they also are available as a regional offering in some markets outside the Golden State.

  • Houston, St. Louis and Chicago are among the markets outside of California serving the bagels at participating locations, the company said.

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