McDonalds is bringing back bagels to boost California sales after state minimum wage hike

• McDonald's is bringing back bagel breakfast sandwiches to California restaurants.
• The popular menu item, plus a $15 million ad buy, could boost sales by 10%, according to Bloomberg.

California's newly enacted fast food wage hike is already having an effect, though not one lawmakers likely had in mind when writing the law: bagels are back at McDonald's in the state.

The Golden Arches brought the popular menu item back to Golden State restaurants earlier this year as one of several levers the company is pulling to drive sales and offset the cost of the pay increase.

A group of franchisees and corporate employees, known as the "Rise and Dominate" team, proposed the idea of reintroducing bagel sandwiches to the state along with a $15 million ad blitz to boost traffic and digital sales, Bloomberg reported.

McDonald's told Business Insider that the team's recommendations were based on best practices from other locations where restaurant operators have had to navigate local wage hikes.

The move could give a financial lift to franchise owners who have complained that the new $20 per hour wage is unfairly squeezing their profit margins.

Scott Rodrick, who owns 18 McDonald's locations in the state, told Business Insider he's already raised menu prices between 5% and 7% since January, but there is a limit to the prices his customers will pay.

Kerri Harper-Howie, who owns 21 McDonald's restaurants in California with her sister, told KTLA News that "the truth of the matter is you can't raise prices enough" to offset the wage increase.

The return of bagels to the breakfast menu — along with a few other moves — could boost top-line sales by 10%, Bloomberg reported, while a higher proportion of digital sales would mean better profitability as well.