Dunkin’ Brands CEO: New York minimum wage plan poor and ill-judged

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Published: July 24, 2015 10:16:18 AM

Dunkin' Brands Group Inc's Chief Executive termed New York's move to increase the minimum wage for fast-food workers "poor and very ill-judged" and could lead to higher prices and fewer jobs for young people.

Dunkin’ Brands Group Inc’s Chief Executive termed New York’s move to increase the minimum wage for fast-food workers “poor and very ill-judged” and could lead to higher prices and fewer jobs for young people.

New York plans to raise the minimum wage to $15 an hour over the next three years, from $8.75 currently, for 180,000 fast-food workers who work for chains with 30 or more U.S. locations.

“We feel strongly disappointed that the Governor chose to go around the legislative process by appointing a wage board with no representative from our industry,” Dunkin’ CEO Nigel Travis told Reuters, warning that the wage increase would lead restaurants to cut back on hiring young people and worsen the unemployment situation.

The New York Wage Board decision, subject to approval by the state labor commissioner, raises the minimum wage for fast-food workers every year by $1.50 an hour till 2018 in New York City and by mid-2021 in the rest of the state.

Unite Here, the union that represents the workers, said the extra money for minimum wage earners will boost New York’s economy.

“This significant wage increase for fast food workers will make a real difference. It will help lift them out of poverty,” said AFL-CIO’s New York State President Mario Cilento.

Travis said Dunkin’ Donuts would work aggressively with its franchisees to reduce the impact from the wage increase by raising prices, cutting costs and seeking labor efficiencies.

“We and our franchisees fully support sensible minimum wage increases … but moving at such a fast rate and just focusing on our industry is a poor and very ill-judged move,” Travis said.

Analysts said the minimum wage increase would likely impact the company’s margins.

“They will be meaningful for them… but I don’t think that detracts from the main story here, that is continued growth in the U.S. with international expansion,” said Philip Van Deusen, director of research at Tigress Financial Partners.

The minimum wage increase would likely be a bigger problem for smaller chains, analysts said.

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