California Governor Gavin Newsom advocated for an exemption to allow top donor and Panera Bread franchisee Greg Flynn to bypass the state’s new minimum wage law, as reported by Bloomberg.
Flynn, who owns two dozen Panera chains in California, gave $100,000 to help Newsom ward off a recall effort and $64,800 to the governor’s reelection campaign in 2022, according to Bloomberg.
California’s new minimum wage law will raise workers’ pay from $16 an hour to $20 an hour at fast food restaurants with more than 60 locations nationally, except for chains that bake and sell stand-alone bread as a menu item as of Sept. 15, 2023.
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Flynn also attended the same high school as Newsom outside of San Francisco, when Newsom was a freshman and Flynn was a senior, according to Bloomberg, citing a yearbook. The two have business connections dating back to 2014, when Flynn bought a resort in Napa Valley from Newsom’s company, and in that same year, Newsom reported income from Flynn’s company.
The contract that Newsom profited from began under previous owners and was not renewed after about a year into Flynn’s ownership of the asset, according to Bloomberg.
In September 2023, Newsom was asked why bread makers like Panera and Boudin Sourdough Bakery were receiving special exemptions in the law, with the governor telling reporters that the provision’s inclusion was “part of the sausage-making” of the bill and that “it’s the nature of negotiation.”
Flynn is worth at least $1.1 billion and controls an empire of 2,600 franchise locations for brands like Applebee’s, Pizza Hut, Taco Bell and Wendy’s, according to Bloomberg. The only other franchise brand that Flynn owns in California is Applebee’s.
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The billionaire originally sought to have Panera not be considered a fast food restaurant, arguing it was a fast-casual chain, according to Bloomberg. The Service Employees Union, which was orchestrating the drive for the bill, later decided instead to create the bread maker carve-out to convince Newsom to sign the bill due to the governor’s relationship with Flynn.
The law also empowers a ten-member Fast Food Council to create the minimum wage, mandate working conditions and require training standards for fast food employees. As a result of the wage increase, some restaurant chains have said they will have to raise prices to adjust to higher expenses, including Chipotle, Pizza Hut, and McDonalds.
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