McDonald’s May be Forced to Leave California

While this might help these companies maximize their profits, it doesn’t help struggling Americans who can no longer afford fast food. As a result, McDonald’s may be leaving California.

Workers are likely delighted at this news, as it means they can better cope with the rising cost of living. However, it isn’t great news for customers because the companies are raising their food prices and laying off workers to cope with the rise.

The fast-food restaurant is eliminating its self-serve beverage stations to reduce costs. Instead, customers will have to go to the counter to get a refill if they require it. This has led many customers to react angrily to the news, saying that free refills should be one of the last things to go. 

If someone were to buy an Egg McMuffin meal, including a coffee and hash browns, it would cost them $17.63. In the past, it would have cost less than $10.

However, the price of goods in the same amount of time has only risen by 31%, which has led many to question why prices have gone up by more than double the amount the price of goods has.

Chipotle, another prominent fast-food chain, has also hiked its prices over recent years, with more price increases likely in the future.

Chipotle is also looking to keep its margins by offering smaller portions while charging higher prices, according to months of scathing customer feedback online.

Any fast-food chain looking to scale back on their portions as a way to deal with increased operating costs should be prepared for a similar public backlash.

62% of Americans are dining out less frequently due to price increases, and half of the respondents, especially those earning less than $30,000 per year, now say that they see fast food as a luxury item.

McDonald’s recognizes that footfall is much less in their restaurants currently, so they have introduced a $5 meal deal for customers in the hopes that it will welcome more people back into their restaurants.

Many are choosing to eat only at home and don’t eat out anywhere. However, those who can find a bit of room in the budget to eat out are choosing traditional sit-down restaurants. It now seems that fast food restaurants are not just competing with each other but also with restaurants previously off their radar. 

The industry might also still be feeling the effects of the pandemic, with a post-pandemic shift of customer bases responsible for reduced footfall and, consequently, the need to increase prices.

Older people were far more cautious about heading back out, visiting restaurants far less often than before. Restaurants with older clientele like Cracker Barrel and Olive Garden have really felt the impact of this, and it has likely affected chains like McDonald’s also.

However, there is no evidence to suggest that McDonald’s has any plans to leave the Golden State. With 1200 restaurants there, it’s unlikely the fast food giant will suddenly close shop.

Regardless of where this rumor came from, it doesn’t seem to have come from an official source, so for the time being, it can be assumed that McDonald’s has absolutely no plans to leave California.

Take Blaze Pizza, for example — a California brand through and through since opening its first locations in Irvine and Pasadena in 2012.

Blaze Pizza recently announced it will be relocating its corporate office to Atlanta, Georgia in a move that will see Blaze Pizza slash its state corporate tax by more than a third.

Blaze Pizza joins a wave of other corporate moves out of California, with the likes of QuickFee relocating to Texas, and Neutrogena abandoning the Golden State and moving to New Jersey.

This is undoubtedly due to the knock-on effects of the state’s minimum wage increase for fast-food workers to $20 per hour, signed into law by Gov. Gavin Newsom in September last year.

In-N-Out Burger, another fast-food chain synonymous with California, announced that it was forced to raise menu prices across the Golden State in response to this wage increase for fast-food workers.

A McDonald’s franchisee operating 18 outlets in the state had considered reducing store hours and delaying planned renovations in the face of increased costs — it’s only then a short step to closing California locations entirely.

The iconic Mexican chain Rubio’s Coastal Grill recently filed for Chapter 11 bankruptcy, after having already closed 48 California locations. So while rumours of McDonald’s leaving California ultimately had no substance to them, it doesn’t seem quite so farfetched given the state of the fast-food industry in the Golden State.

Especially as fast food places are aimed at those on lower wages who can now no longer afford to eat there, there is some hope that fast food companies will listen and start reducing their prices so that people will go back.

While some places have seen some growth due to these programs, it’s not quite the amount they’re used to. This makes it clear that much more needs to be done before fast food restaurants, including McDonald’s, can see an increase in footfall once again.