Panera Bread Spared From CA's $20 Minimum Wage Law As Newsom Shields Affluent Allies

By Lisa Pelgin | Friday, 01 March 2024 04:50 PM
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In September 2023, California's decision to increase the minimum wage to $20 per hour sent shockwaves through the fast food and fast casual dining industry.

The immediate aftermath saw many restaurants raising their prices, laying off staff, and even shutting down locations. However, one chain seemed to be immune to these changes: Panera Bread.

Greg Flynn, a prominent figure in California's Panera Bread franchises and a known associate of Governor Gavin Newsom, appeared to be unaffected by the wage hike. The new $20 minimum wage rule, it seems, has a specific exemption for restaurants that sell bread, providing a significant financial advantage to Panera Bread and its owner.

Newsom, a Democrat, signed the law in September, raising the minimum wage for fast food workers from $16 to $20 per hour. However, the Fast Food Accountability and Standards Recovery Act (FAST Act) includes an unusual clause that exempts "chains that bake bread and sell it as a standalone item," according to Bloomberg News.

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This exemption, reportedly sought by Newsom, benefits Greg Flynn, the billionaire CEO of Flynn Restaurant Group, which owns several Panera Bread locations in California. Flynn, a high school classmate of Newsom's, has been involved in business dealings with the governor and has contributed to his political campaigns.

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Flynn, who is the largest franchisee in the US with thousands of brands including Applebee’s, Pizza Hut, Taco Bell, and Wendy’s, acquired a Napa Valley resort in 2014 that was managed by Newsom’s hospitality firm. Flynn's net worth is estimated at $1.1 billion, and he has donated at least $164,800 to Newsom’s campaigns.

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Critics argue that this is not the first time Newsom has shown favoritism towards his donors. They point to the prolonged statewide lockdown between 2020-2021, which they claim was to appease his largest donors, the teachers' unions. Now, they argue, he is shielding his wealthy associates from the impact of the new wage law.

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Both Flynn and Newsom have been approached for comment. Flynn told Bloomberg News that he had no part in creating the bread exemption, while Newsom told reporters that the exemption was “part of the sausage-making” in politics.

Newsom also referred to "the collective wisdom of the legislature" in crafting the law. However, critics have questioned how many of these "wise" individuals have received donations from Flynn. In the 2017-2018 election cycle, Flynn's donations included San Francisco Democrat Assemblywoman Buffy Wicks, Democrat Senator Scott Weiner, and Democrat Assembly Speaker Robert Rivas.

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The wage law has faced significant backlash from fast-food chains operating in California. McDonald’s described the increase in minimum wage as a "devastating financial blow" that will cost each of its locations in the state an estimated $250,000 a year. Other chains, such as Chipotle, are reportedly considering a price increase to offset the rise in wage costs.

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Critics argue that Newsom's actions show a blatant disregard for the citizens of the state who will be affected by the wage increase. They point to his handling of the French Laundry scandal in 2020 and his decision to send his children to in-person learning while the rest of California's children were forced to learn remotely.

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Newsom's critics also point to his signing of the anti-freelancer bill AB5 into law, which exempted plaintiffs' lawyers and medical doctors but not paralegals or nurse practitioners. They argue that this is another example of Newsom favoring those who donate to his campaigns.

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In 2021, Reed Hastings of Netflix donated three million to Newsom's Stop the Republican Recall campaign, and the entertainment industry subsequently received a favorable deal. Flynn and his Flynn Properties donated $100,000 to the same campaign and $64,800 in 2022 to Newsom's gubernatorial campaign.

Critics argue that this is indicative of the way Newsom conducts business, favoring those who donate to his campaigns. They argue that this is a clear example of corruption, with one critic even calling him "America's most corrupt governor."

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