In April, fast-food chains in California will have to pay their employees at least $20 an hour under a new minimum wage law. However, that minimum wage requirement will not apply to certain chains, including Panera Bread.
People are speculating why Panera is exempt, with some bringing up California Gov. Gavin Newsom’s, D, ties to an owner of several of the franchises.
The new minimum wage law requires fast-food restaurants that have at least 60 locations to start paying their workers $20 an hour.
The exception is if a fast food chain bakes and sells bread as a standalone item — which Panera does. In that case, a franchise does not have to increase the amount of money it pays their employees. Their minimum wage starts at $16 dollars an hour.
As Bloomberg first reported, billionaire Greg Flynn’s Flynn Restaurant Group owns more than 100 Panera Bread franchises, including a couple dozen in California. Flynn happens to have close ties with Newsom, according to sources who spoke with Bloomberg.
Flynn is a longtime friend and donor to the governor, according to Bloomberg’s report. The two went to high school together and Flynn has donated to Newsom’s campaigns, including a $100,000 and $64,000 donation in 2022. Sources told Bloomberg that Flynn is known to brag about his close relationship with Newsom.
In a press conference last year, a reporter questioned Newsom about any ulterior motive behind the exemption that favors Panera over other fast-food chains. The governor chalked it up to negotiations, saying the decision was “the result of countless hours of negotiations with dozens of stakeholders over two years.”
People familiar with those negotiation talks said it was Newsom pushing for Panera to be exempt. This bakery clause was adopted “as a means of gaining the governor’s support for the legislation,” according to Bloomberg’s sources.
Other fast-food chains were not happy with California’s wage hike.
McDonald’s said the minimum wage increase will cost each California location $250,000 a year, calling it a “devastating financial blow.”
Chipotle said the wage increase will cost the company an extra $74 million and will raise menu prices in the “high single digits to preserve margins.”
El Pollo Loco is rolling out kiosks to trim its workforce and will also increase food prices.
In order to qualify for the bakery exemption, restaurants had to have started baking and selling bread in September 2023 or before. Croissants and bagels do not qualify.
Michelle Korsmo, the head of the National Restaurant Association, said everyone is scratching their head over the bread exemption, and described the provision as an example of why her organization’s members should “develop political connections to seek better legislative outcomes.”
