McDonald’s weighs in on California’s fast food bill

McDonald’s recently gave its opinion on AB 1228, recently adopted by California.

Several executives from the fast food chain made this announcement in an internal message sent last week to members of the American restaurant network and obtained by FOX Business. CNBC previously reported on the communication.

The bill, awaiting the governor’s signature, has various elements, including key elements such as raising the minimum wage for fast food workers to $20 an hour and creating a council for governing fast food chains, setting guidelines for wages and making recommendations regarding working conditions. . Restaurants with at least 60 locations nationwide, except those that make and sell their own bread, would be subject to its provisions.

The final version of AB 1228 included “totally different” language than the previous version of the bill, McDonald’s said in its internal message. The company deemed the old version “harmful to our business” and to its restaurants.

The terms were adopted after industry and union officials reached an agreement. California Governor Gavin Newsom’s office also participated, according to reports.

Compared to the original proposal, AB 1228, as currently written, prevents franchisors and franchisees from being held jointly liable, limits the authority of the Fast Food Council and eliminates AB 257. Another measure that AB 1228 will provide a “clearer and more predictable salary schedule through 2029.” “, according to McDonald’s.

The company said it had “worked tirelessly” over the past 12 months to push back against California measures it saw as detrimental to its business model, with its efforts involving “building a coalition of brands” to submit AB 257 to a referendum and strengthen its political positions. engagement in the state “in a significant way”. He has worked with the California Owner/Operator Task Force and others, according to the post.

He describes California as a place where efforts to eliminate the franchise model have arisen “time and again.”

In the post, the company acknowledged that AB 1228 could result in higher costs for California franchisees. A group representing franchisees recently suggested they could reach $250,000 per location on an annual basis.

However, the bill provides “regulatory certainty and avoids legislation that would devalue owner/operators’ businesses and their ability to make decisions for their restaurants,” McDonald’s said.

The fast food giant said it is taking steps to help California McDonald’s restaurant franchisees successfully navigate the “new operating environment.”

McDonald’s has formed a “cross-functional, fast-action” team of company employees and franchisees to formulate an “action plan” and make co-investments, it said . It will take best practices that other places have learned after being subject to labor regulations like those that came to California and deploy similar pilot strategies for the Golden State, according to the internal message.

There are nearly 1,300 McDonald’s locations in California, according to a March report from the fast food company. These restaurants, managed by more than 230 owners or operators, employ more than 70,000 people.

In the message, the company also predicted that its national political commitment would see a strengthening.

On Monday, the value of McDonald’s shares saw a 5% rise since the start of 2023. Meanwhile, over the past year, it has risen a bit more, up 8%.

Jay Caruso contributed to this report.

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