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McDonald’s Dollar Menu Endangered as Prices Increase With Minimum Wage
November 2, 2023
McDonald’s has confirmed it will increase its menu prices in California to balance the cost of the new minimum wage law implemented by Governor Gavin Newsom. Under this law, fast-food employees in the state will receive a minimum wage of at least $20 per hour starting in April next year.
McDonald’s CEO, Chris Kempczinski, acknowledged during an earnings call that the new legislation will significantly affect their California franchisees’ expenses, insinuating that the change will likely lead to higher prices.
“Certainly, there’s going to be some element of that that does need to be worked through with higher pricing. There’s also going to be things that I know the franchisees and our teams there are going to be looking at around productivity. How all of that plays out, there will certainly be a hit in the short-term to franchisee cash flow in California, tough to know exactly what that hit will be because of some of the mitigation efforts.”
McDonald’s CEO Chris Kempczinski via Fox Business
Despite falling inflation rates, McDonald’s had already escalated its prices nationwide, thereby propelling profits. The price augmentation in California is anticipated to have a similar effect, even though it may add to the cost of living for the state’s residents.
During an earnings call, Chipotle’s CFO Jack Hartung also indicated that the chain anticipates increasing its prices in California by a “mid-to-high single-digit” percentage to manage the impact of the new wage law.
No More McDonald’s Dollar Menu?
Due to escalating costs, restaurants have been increasing their menu prices progressively over the past few years.
While McDonald’s prices have risen recently in general, one thing customers have been noticing in particular is their dollar menu prices. According to Insider, the “McDonald’s dollar menu is a myth. The chain is getting called out for not having a single item that costs $1.”
In a noticeable shift from its offerings in 2018 — when the company first announced its three-tiered value menu — McDonald’s no longer offers $1 items, according to an examination of menus from across the U.S. Highlighted in a widely viewed TikTok video by Anne Arroyo (@anna2morrow), the dollar menu now lists all items, including drinks, above the one-dollar mark.
The video sparked varied reactions among viewers, with an employee claiming that apple slices are the only item the fast-food chain still sells for a dollar. Regional differences in pricing were also noted, with one commenter from Florida stating the dollar menu drinks at their local outlet cost $2.79.
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