California's wage law could pave the way for $18 Big Macs

Working Lunch: A McDonald's in Connecticut is already charging that much for a combo featuring the signature sandwich. Might that become the threshold in the nation's largest restaurant market?

A McDonald’s in Connecticut is charging nearly $18 for a Big Mac combo meal, according to this week’s Working Lunch government-affairs podcast. But don’t regard it as a fluke, say the broadcast’s co-hosts.

The episode looks at McDonald’s plan for coping with California’s landmark new wage law, which will raise the minimum wage for more than a half-million fast-food workers to $20 an hour on April 1. The quick-service giant has already informed its shareholders that it will raise menu prices to offset the impact, though without specifying how high of a price might be needed.

“I suspect it will be close to that Connecticut price point,” said Franklin Coley, who co-helms Working Lunch with Joe Kefauver, his business partner in the Align Public Strategies political consultancy in Orlando, Fla.

“We’re finally seeing a $20 burger—we’re almost there,” continued Coley, noting how that price has always been the red line a quick-service operation couldn’t cross if it wanted to retain its value orientation. But with an employer mandate like California’s new law, that threshold may have to be crossed.

Kefauver asserted that rocketing fast-food prices could fundamentally alter competition for share of stomach by wiping out the difference between what limited-service and full-service restaurants charge for their burgers.  

No wonder, he said, that McDonald’s is also readying a new scaled-down, highly automated concept called CosMc’s, which will slash the burger giant’s labor needs.

To hear the discussion of what might be next for the fast-food business, in California and beyond, hit the Play button on this week’s episode.

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