Newsom’s office calls allegations about Panera Bread franchisee ‘absurd,’ says company not exempt from law

(Senja Larsen/Flynn Restaurant Group)

Newsom’s office calls allegations about Panera Bread franchisee ‘absurd,’ says company not exempt from law

California politics, homepage news

Taryn Luna

February 29, 2024

Gov. Gavin Newsom’s spokesman refuted a Bloomberg News story claiming the governor had pushed to exempt bakeries from the state’s fast-food wage law in favor of a political donor who owns Panera Bread restaurants. He called the report ‘absurd’.

The Bloomberg story published this week alleged that Greg Flynn, a billionaire and CEO of a restaurant group that operates Panera locations, lobbied Newsom’s top aides “to reconsider whether fast-casual chains like Panera should be classified as fast food be classified.”

The story claimed that Service Employees International Union California State Council agreed to exclude restaurants that operate bakeries “as a means to win the governor’s support for the legislation.” The story said “the rationale was the governor’s long-standing relationship with a Panera franchisee.”

“The governor never met with Flynn about this bill and this story is absurd,” said Alex Stack, a spokesman for Newsom. “Our legal team investigated and it appears Panera is not exempt from the law.”

Bloomberg did not immediately respond to a request for comment following the statement from the governor’s office.

The governor’s office said the legislation was the result of countless hours of negotiations over two years

Newsom administration officials

met dozens of entrepreneurs and union representatives.

Panera’s inclusion in the law comes down to whether the company produces its bread on site or brings in dough made at a central facility, a source involved in the talks said.

According to the law, bakeries are exempt from the obligation to pay the higher wages.

This only applies if the establishment produces bread as a standalone menu item for sale, and does not apply if the bread can only be exempted for sale as part of another menu item, the law states.

Flynn Holdings is a restaurant group and real estate investment trust that claims to be the nation’s largest restaurant franchisee. The company’s restaurant portfolio is vast and includes more than 444 Applebee’s restaurants, more than 280 Taco Bell locations, more than 133 Panera Bread cafes, 367 Arby’s restaurants, 937 Pizza Huts and and

According to the website, there are 194 Wendy’s restaurants.

Flynn has been a generous donor to Newsom’s political campaigns, including contributing $100,000 to fight a failed recall effort against the governor.

Newsom’s statement comes after California Senate Republican Leader Brian Jones on Thursday called for an investigation into the allegations.

“Simply put, campaign contributions should not get you any exceptions in the law,” Jones said. “That is crony capitalism. It is corrupt and unacceptable.

Unions successfully pushed Assembly Bill 257, also known as the Fast Food Accountability and Standards Recovery Act, through the state legislature in 2022. At the time, bakeries were exempt from the law as labor unions, the governor’s office and other groups tried to define what restaurants the bill would apply to.

The original fast food law, which Newsom signed last September, created a 10-member statewide fast food council and regional councils made up of worker and employer representatives to set minimum wages, hours and working conditions in California. Under the law, the city could have raised the minimum wage to $22 per hour by 2024 for employees of chains with more than 100 restaurants.

Fast food companies quickly launched a successful campaign to qualify a referendum on the vote to overturn AB 257, halting the law’s enactment until a statewide vote in November 2024.

Under a new agreement reached last year between fast food companies and the working class, the referendum will be removed from the ballot and workers will receive a $20 per hour wage increase starting this year.

Bakeries remain exempt from the law.


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