It’s a bad time to be a fast food business in California right now, unless you’re Panera Bread. Then you’re having a bad time for completely different reasons.
As of April 1, 2024, all fast food restaurants in California will be required to have a minimum wage of $20 an hour for their employees, as per a new law from September 2023. Specifically, any fast food restaurant that has at least 60 locations nationwide will be affected by this law. Brands like McDonalds, Jack in the Box, Chipotle, and others have warned that this will be reflected with price increases for their CA locations. If you thought the $18 Big Mac was bad, it’s going to get worse.
However, one particular line of text in the law is causing a stir among critics of the legislation. Excluded from this new law are bakeries “that produces for sale on the establishment’s premises bread.” In case you forgot what Panera Bread was all about, they sell a variety of baked goods, including bread, in addition to their salads, soups, and life-threatening lemonades. So when April 1st comes around, Panera gets to laugh at the joke played on all its competitors.
While this seems like an odd exception, those familiar with the situation are claiming CA Governor Gavin Newsom intentionally pulled a favor for his friend, billionaire and Panera Bread franchise owner Greg Flynn. Flynn owns about 24 different Panera Bread locations across CA, so without the exception, he would be greatly affected by the minimum wage increase. Speaking with Bloomberg on the matter, people familiar with the new law said Newsom personally pushed to have that text added to the law, to allow his friend to skid by.
The same sources also claimed Flynn himself urged Newsom’s team to consider whether or not fast-casual restaurants such as Panera or Chipotle should be considered fast food under the law. Flynn was a vocal opponent of the law when it was introduced during the summer of 2023. While that specific exception wasn’t added to the law, the bread piece was.
The Flynn Group, Flynn’s franchising company, owns several restaurant chains across the country, but only has two brands in CA: Applebee’s and Panera. All their other brands, including fast food chains like Arby’s, Taco Bell, and Wendy’s, don’t have CA locations, and based on Flynn’s opinion of the law, we’re assuming he’s not opening any in CA in the near future. Flynn has released a statement denying any involvement in creating the exception. Newsom’s office also put out a statement, claiming the law “was the result of countless hours of negotiations with dozens of stakeholders over two years,” denying any favoritism.
Flynn is no stranger to assisting Newsom during his campaigns, as records show he’s donated over $150,000 to the governor over the years. The Flynn Group also acquired a resort property a few years back managed by Newsom and his business Plumpjack Group. The two go quite far back, as Flynn attended the same high school as Newsom. No matter what the two publicly say, it definitely smells like a fishy situation.
Even with no official comment from the governor or franchisee in question, many CA lawmakers are questioning the legitimacy of the exception. CA State Representative James Gallagher (R.) took to X to demand the connection be investigated. “Can any franchisee get an exemption from the $20 minimum wage law or do they need to donate more than $150k to Newsom first?” he wrote. As of writing this, no official investigations have been launched regarding the exemption.