Big Brother and Your Big Mac

In the fall of 2022, California passed what shortens to the FAST bill, (Fast Food Accountability and Standards Recovery Act), which would require fast-food restaurants to pay a minimum wage of $22 an hour with annual increases of 3.5%.  Following considerable pushback, a referendum vote has been scheduled for November 2024 and implementation is blocked until that takes place.  Virginia has followed with a similar bill.  However, with a Republican Governor and Republican controlled house, this is far from a done deal.

Needless to say, McDonald’s is not on board. McDonald’s USA president, recently wrote, “under the FAST Act, an unelected council of political insiders, not local business owners and their teams, would make big decisions about crucial elements of running a business”.  He also noted that the proposed increase in fast-food worker wages could raise the cost of eating at McDonald’s by as much as 20%.

Investors should recognize that, while implementation of the FAST Act is not imminent, it is not prudent to underestimate the propensity of the political class to attempt to impose their collective wisdom on business decisions.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA