November 30, 2023

New York

In the 1990s, Pizza Hut unveiled an important cheese-in-bread innovation, the stuffed crust pizza. Now, Philadelphia cream cheese and H&H Bagels, a New York City-based bagel shop, are trying to please the carbohydrate- and dairy-loving communities with a new and dubious spin on the stuffed crust: The bagel stuffed with cream cheese.

But unlike stuffed-crust pizzas, the bagel is filled with cheese after it is baked, making it more of a cream cheese bagel donut, if not in spirit then at least in form.

The bagels are “baked fresh daily and then cooled to be individually stuffed with Philly’s signature cream cheese one at a time,” according to Jay Rushin, CEO of H&H. “H&H Bagels use a pastry tool to pipe in the Philly cream cheese by hand,” he added. “The process leaves very small holes where the insertions are made, similar to a jelly donut.”

The obvious question, as is often the case with food mash-ups, is why. What’s so wrong with slicing a bagel and slathering on a healthy amount of cream cheese? Why must we pre-cheese the bagel? Because, Philly owner Kraft Heinz and H&H say, the simple acts of cutting and spreading are taxed, at least in New York.

The cream cheese-stuffed bagel.

“New York City may be the bagel capital of the world, but its residents incur a ludicrous ‘bagel tax’ each time they opt to purchase a bagel that’s sliced and schmeared with cream cheese,” the companies said in a release.

That’s true, sort of. New York doesn’t have a specific bagel tax, explained Ryan Cleveland, a representative of the New York State Department of Taxation and Finance. But certain food products, including baked goods, are tax exempt, while prepared foods are not.

“It’s when a bagel becomes a sandwich or a prepared food that it then becomes taxable,” he said. In New York City, food sold at restaurants is taxed at 8.875%.

Philadelphia and H&H plan to skirt this rule with the stuffed bagel, which is available at H&H’s Manhattan locations for $1.90 each, from Friday through Tax Day on Tuesday, April 18; and also online.

“In today’s landscape, people are juggling enough hurdles, and having to pay an extra tax to enjoy their favorite bagel with Philly cream cheese should simply not be one of them,” said Keenan White, senior brand manager of Philadelphia cream cheese, in a statement.

White and Kraft Heinz

may well care about their customers’ tax payments. But for food companies, marketing stunts are about creating buzz and staying at the forefront of customers’ minds when they visit the supermarket — or bagel shop.

Kraft in particular has in recent years been leaning into questionable combinations, like the Velveeta Martini and a hot dog flavored popsicle, to promote its brands and get attention.

Philadelphia cream cheese, which struggled with shortages in the past, turned that issue into a marketing opportunity as well. There’s no problem with supply now, according to the brand.


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