McDonald’s Just Made a Bittersweet Announcement, and It’s the Start of a New Era

This is a story about McDonald’s and getting what you want.

It starts with the fact that the fast food chain is bringing back a much-longed-for menu item, at least in California McDonald’s restaurants: bagel breakfast sandwiches.

But, here’s the bittersweet twist. 

Recently, I wrote about how McDonald’s fans gathered on Facebook to try to bring bagels like this back to the menu. (Blame the pandemic for their disappearance in the first place.)

I was impressed that they weren’t just griping; they organized calls to local franchisees and asked them, nicely, to put them on the menu. 

And while it’s never been totally clear whether their efforts paid off directly, or whether this was something McDonald’s was considering anyway, bagels did indeed start popping up at an increasing number of McDonald’s all around the country.

In California however, there’s another factor at play.

You might know that the Golden State recently began a new era in terms of its minimum wage, in that as of this month, fast food workers are singled out and guaranteed an impressive $20 an hour.

As a result, McDonald’s told me, the company “stood up a dedicated team of staff and franchisees” and asked them to figure out how to “drive sales, grow share and increase restaurant profitability.”

Let’s quote a bit more from what McDonald’s told me, because it’s instructive: 

This team has gathered best practices from around the world where municipalities have managed wage increases and will pilot innovative short and long-term solutions for California. 

Our goal is to ensure our business model is set up to prosper for the long term, and that it continues to best serve our customers, crew members, communities and franchisees.

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

So, there you have it: Raise the minimum wage, and you get bagel sandwiches for breakfast.

Funny how the world works sometimes, isn’t it?

And that would be it, except that when I first heard about McDonald’s trying to figure out how to become more profitable, I wondered: Why wait for the minimum wage increase to do a study like this?

But then I started to figure it out. If the government requires you to increase employees’ pay, I suppose you have three choices:

1. You can absorb the increased cost. Not every company is sufficiently profitable to do this, however.
2. You can get rid of some workers, perhaps by replacing them with automation. (That’s my least favorite option, but it’s what many other fast-food chains are reportedly doing in California.)
3. You can see if there is a way to increase productivity, so that the wage increase doesn’t cost you in the aggregate, and you can keep people working.

At least in its effort here, McDonald’s seems to be going toward option 3–meaning that if you can get more people coming into your restaurant, and maybe each employee sells a bit more product each hour, then their increased wages get baked into your model.

Look, we’re all affected by outside trends in business — political trends, automation trends, and big-picture economics. Sometimes you just need to figure it out.

So overall, I’m glad that McDonald’s employees are getting paid a bit more.

I’m glad that McDonald’s is apparently trying to make it all work — especially without simply replacing employees directly with technology. 

And I’m glad that some customers who really, really like McDonald’s bagel sandwiches will be getting what they want.