California Minimum Wage Law Exempts Panera Bread After Owner’s Donation to Gov. Newsom: Report

California Governor Gavin Newsom has signed into law a measure exempting Panera Bread from a recent minimum wage increase for fast-food chains, a move reportedly influenced by campaign donations from the billionaire CEO of Flynn Restaurant Group, which owns several Panera Bread locations in the state.

The law, known as the Fast Food Accountability and Standards Recovery Act (FAST Act), raises the minimum wage for fast-food workers from $16 to $20 an hour. However, it includes a notable exception for chains that primarily sell bread as a standalone item, benefiting businesses like Panera Bread.

Greg Flynn, CEO of Flynn Restaurant Group and a major donor to Newsom’s political campaigns, has been involved in business dealings with the governor, including the acquisition of a Napa Valley resort previously managed by Newsom’s hospitality firm. Flynn’s net worth is estimated at $1.1 billion, and he has contributed at least $164,800 to Newsom’s campaigns.

Flynn has denied involvement in crafting the bread exemption, and Newsom has described it as a typical aspect of political negotiations. The law, according to Newsom’s office, resulted from extensive discussions with various stakeholders over two years.

However, industry observers have raised eyebrows at the bread exemption, with the National Restaurant Association acknowledging the significance of relationships in shaping legislation. Flynn, initially critical of the wage increase, reportedly lobbied Newsom’s aides to reconsider Panera Bread’s classification as fast food.

The exemption for bread sellers was added to the legislation as a concession to gain the governor’s support, with a union advocating for the wage hike accepting it as part of the negotiation process.

Meanwhile, other fast-food chains like Chipotle and McDonald’s have warned of price hikes in response to increased labor costs. Chipotle’s CFO indicated that significant price increases were necessary to offset rising expenses, while McDonald’s CEO mentioned the likelihood of menu price adjustments in California.

In a separate development, Panera Bread recently agreed to a $2 million settlement in a class-action lawsuit alleging misleading practices regarding delivery order fees and menu prices.

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