McDonald's CEO says restaurants that rely on tips are 'getting the customer to pay' for their employees

Core Viewpoint - McDonald's CEO Chris Kempczinski highlights that the "no tax on tips" provision in the Big Beautiful Bill creates an uneven playing field for restaurants, as it allows establishments that rely on tips to effectively shift labor costs to customers while benefiting from tax relief [1][2][3][4]. Group 1: Impact on McDonald's - McDonald's does not allow tipping, meaning its workers will not benefit from the tax relief associated with tips [2]. - The lack of tipping at McDonald's puts the chain at a disadvantage compared to competitors that do allow tips, as those establishments can pay lower base wages [2][3]. - Under federal law, restaurants that allow tipping can pay as little as $2.13 per hour, provided that tips bring the total to at least the federal minimum wage of $7.25 per hour [3]. Group 2: Industry Dynamics - Restaurants that factor gratuities into compensation effectively have customers subsidizing labor costs, which creates an unfair competitive environment [4]. - The prevalence of tipping extends beyond restaurants, affecting gig workers in delivery and ride-hailing services, where minimum wage laws are often not applicable [5]. - A survey indicates that customers are growing weary of frequent tipping requests across various establishments [11]. Group 3: Proposed Solutions - Kempczinski suggests that all restaurants should be required to pay the same minimum wage, regardless of tips, to create a more equitable labor market [11][12]. - Some states, including Alaska, California, and Minnesota, already have laws mandating equal minimum wage for all workers [11]. - Implementing such laws could potentially reduce poverty and employee turnover without leading to job losses [12].