California Democratic Governor Gavin Newsom reportedly pushed for a carveout in a fast food minimum wage law that exempted a donor who owns several Panera Bread franchises.
Newsom signed legislation last year which increased fast food minimum wages to $20 per hour starting next month, as well as established a Fast Food Council with authority to create additional rules for the fast food industry. The law nevertheless exempts restaurants operating a bakery that “produces for sale bread as a stand-alone menu item.”
The carveout was reportedly added to benefit Greg Flynn, a major donor to Newsom and a billionaire who franchises more than two dozen Panera Bread restaurants, according to a report from Bloomberg, which noted that Newsom himself asked for the bread product exemption.
The outlet reported that among the donations from Flynn to Newsom were $100,000 to defeat a recall effort and nearly $65,000 for his recent reelection bid.
Newsom previously told reporters that the provision came as “part of the sausage-making of politics.” Flynn told Bloomberg that he did not have a role in creating the carveout.
Rival fast food executives previously castigated the bakery provision: McDonald’s USA President Joe Erlinger asserted in a letter about the fast food law two years ago that the “mystifying” exclusion for restaurants with bakeries was “the outcome of backroom politicking.”
The enactment of the new law prompted firms like Chipotle and McDonald’s to substantially raise their prices in the state. Many critics have noted that increasing minimum wages can cause labor market distortions and increase price pressures on consumers: one survey of labor economists conducted by the Employment Policies Institute found that roughly 83% opposed the California fast food law, while strong majorities agreed the law would raise operating costs for restaurants, induce higher costs for customers, and cause the closure of franchises.