California Governor Gavin Newsom will exempt Panera Bread Co. from a new $20-an-hour minimum wage increase after billionaires from several of the fast-food chain’s locations donated to his campaign, according to reports. signed into law.
Newsom, a Democrat, signed a bill in September that increases the minimum wage for food-fast workers from $16 an hour to $20 an hour.
However, the Fast Food Accountability and Standards Restoration Act (FAST Act) includes an unusual carve-out that exempts “chain restaurants that bake bread and sell it as a stand-alone product.” According to Bloomberg News.
Newsom is reportedly seeking a waiver that would, among other things, benefit billionaire Greg Flynn, whose Flynn Restaurant Group owns about 20 Panera Bread stores in the state. be.
Mr. Flynn attended the same high school as Mr. Newsom and was involved in business dealings with the California governor, according to Bloomberg News. He also contributed to Newsom’s political campaign.
Mr. Flynn, the nation’s largest franchisee with thousands of brands including Applebee’s, Pizza Hut, Taco Bell and Wendy’s, acquired a Napa Valley resort managed by Mr. Newsom’s hospitality company in 2014, according to disclosure documents. did.
Flynn’s net worth is valued at $1.1 billion, according to the Bloomberg Billionaires Index. He donated at least $164,800 to Mr. Newsom’s campaign.
The newspaper has reached out to Mr. Flynn, Mr. Newsom and Panera Bread for comment.
Flynn told Bloomberg News that he had no role in developing the bread exemption.
Newsom told reporters last month that the exemptions are “part of the sausage making” of politics.
Michele Colmo, president of the National Restaurant Association, said at an industry conference last year that the bread exemption “has everyone scratching their heads.”
“We may be celebrating or we may be lamenting the bakery exemption,” Colmo said, according to a Bloomberg report. “But remember, everything comes through relationships.”
The governor’s office told Bloomberg News that the legislation is “the result of countless hours of negotiation with dozens of stakeholders over two years.”
Flynn was publicly critical of the bill when it was first introduced in 2022. Increasing the minimum wage for fast food employees would have a negative impact on franchise owners’ businesses, he said.
According to Bloomberg News, Mr. Flynn secretly encouraged Mr. Newsom’s aides to reconsider whether Panera Bread could be considered fast food.
The exemption for bakers was included in the bill after labor unions pushing for a minimum wage increase accepted it as a concession aimed at gaining support from the governor, the report said.
Earlier this month, Chipotle executives warned California consumers could expect “substantial” price increases due to the minimum wage hike.
Jack Hartung, Chipotle’s chief financial and administrative officer, told investors on an earnings call that the company needed to raise prices to keep up with rising labor costs.
McDonald’s CEO Chris Kempczinski warned in October that the Big Mac maker would have to raise menu prices in California as well.
The chain has raised prices nationwide amid rampant inflation, including charging $18 for a Big Mac meal.
Panera Bread agreed early Wednesday to pay $2 million to settle a class-action lawsuit that accused the chain of misleading customers about delivery order fees and menu prices.
