Panera Spared $20 Wage After Donation to Newsom

( – Businesses are facing the costs of raising minimum wages mandated by states like California, which is raising minimum pay from $16 per hour to $20 per hour. But some are claiming that businesses like Panera Bread, the “fast casual” sandwich chain, will escape the new pay law because of a carve-out.

The Associated Press reports that the state’s new minimum wage law does not apply to businesses that make and sell bread as a stand-alone item, which Panera does. Numerous media reports claim the bakery exemption resulted from a meeting with a donor to Governor Gavin Newsom’s campaign, Gregg Flynn, who owns more than 20 Panera Bread locations.

But Newsom’s team said this alleged meeting between Flynn and Newsom never happened, calling the claim “absurd.” Newsom spokesman Alex Stack said the two never met about the bakery exemption, and that the exemption would not apply to Panera anyway. But Flynn said he did meet with Newsom’s staff about the bill, even if not with the governor himself.

According to the governor’s staff, the exemption is only available to restaurants that mix and prepare bread on site as well as baking it and selling it. The governor’s office claims that Panera is not covered since it mixes dough at one location and then sends it to Panera restaurants for baking and sale.

The only thing clear about the law and its exemption is the confusion it has caused. When the California law passed in 2023, Michelle Korsmo, CEO of the National Restaurant Association, said members were “scratching their heads” to figure out the bakery exemption.

One thing that seems certain is that restaurant food prices will rise in the Golden State. Raising the minimum wage raises costs for a business, and consumers foot the bill in the form of menu price increases.

Last fall, the chief executive of McDonald’s, Chris Kempczinski said the burger chain would raise prices in California to pay for the new, higher salaries. There is some evidence this has already happened, with consumers reporting that they’ve paid almost $18 for a combination meal with a Big Mac, fries, and a soda.

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