Wed. Sep 20th, 2023
    McDonald’s Reacts to California’s AB 1228: What You Need to Know

    McDonald’s, the popular fast-food chain, recently addressed California’s newly-passed AB 1228 in an internal message to its U.S. restaurant system. The bill, awaiting the governor’s signature, includes raising the minimum wage for fast-food workers to $20 per hour and establishing a council to govern fast-food chains. McDonald’s executives stated that the final version of the bill differs significantly from the initial proposal, which they considered harmful to their business. The terms of AB 1228 were modified after agreements were reached between industry and union officials, with involvement from California Gov. Gavin Newsom’s office.

    Compared to the initial proposal, the current version of AB 1228 eliminates joint liability for franchisors and franchisees, reduces the Fast Food Council’s authority, and removes another measure, AB 257. McDonald’s stated that one positive outcome of the bill is the implementation of a clearer and predictable wage schedule through 2029. However, the company acknowledged that AB 1228 could lead to higher costs for franchisees in California, with estimated annual costs potentially reaching $250,000 per location.

    Despite these challenges, McDonald’s assured its franchisees that it would provide support in navigating the new operating environment. The company has formed a team of company staff and franchisees to create an action plan and make co-investments to help franchisees adapt. McDonald’s also plans to learn from other locations that have faced similar labor regulations and implement pilot strategies in California.

    Currently, there are nearly 1,300 McDonald’s locations in California, employing over 70,000 individuals. The company emphasized that it has been actively working to protect its business model in California over the past year, forming coalitions and engaging politically in the state. McDonald’s also hinted at increased political engagement on a national level.

    Despite uncertainties, the stock value of McDonald’s has experienced a slight increase. As of Monday, the stock has risen 5% since the beginning of 2023 and 8% over the past year.


    – FOX Business
    – CNBC