McDonald’s Corp share price down, lifts pay at company-owned US restaurants

McDonalds Corp., the worlds largest restaurant group, said it will raise wages at the 1 500 stores in the US it owns and also allow both full-time and part-time employees to accrue paid time-off.

A month after Steve Easterbrook took over as chief executive officer, the company is lifting wages to at least $1 above the legal minimum wage for the state, starting July 1st. However, the enhanced pay will affect only those 90 000 people employed at company-owned restaurants, a fraction of the 750 000 who work at McDonalds nationwide, including franchised outlets. The franchises operate their individual businesses and make their own decisions on pay and benefits for their employees, the restaurant chain said.

By the end of 2016 the company expects that the average hourly wage for workers covered by the new policy should surpass $10.

In addition, employees at the company-owned stores with at least one year of service will begin to accrue personal paid time-off. This added benefit affects both full-time and part-time employees and will be paid in full value, in case they dont take the time theyve earned.

“We are acting with a renewed sense of energy and purpose to turn our business around,” Mr. Easterbrook said. “We know that a motivated workforce leads to better customer service so we believe this initial step not only benefits our employees, it will improve the McDonald’s restaurant experience. We’ll continue to evaluate opportunities that will make a difference for our people.”

However, critics have already voiced their discontent as the work benefits only apply to a mere fraction of McDonalds entire US workforce, although the move could prompt some of the franchises to improve their own terms. Employees at fast food chains have been demanding for a minimum wage of $15 per hour in the sector, having held strikes and street protests over the past two years. The national campaign will initiate a new wave of strikes in 200 cities on April 15th, having also criticized the small scope of workers affected by the wage increase.

Employees nationwide, including those working at franchised restaurants, will however receive help in achieving a higher level of education as the company expands its Archways to Education offerings to include free high school completion and college tuition assistance. McDonalds will cover the costs for eligible restaurant employees to earn a high school diploma through Career Online High School, a national accredited program, while also assisting those seeking college education with college credits and tuition assistance. The company is also expanding its offering for free English classes.

“Because we joined together and stood up, McDonald’s was forced to raise pay,” said Kwanza Brooks, an employee earning the federal minimum, cited by the Financial Times. “Still, this is too little to make a real difference, and covers only a fraction of workers. We’re going to keep fighting until we win $15 and union rights for all fast-food workers and our families.”

McDonalds Corp fell 1.18% on Wednesday in New York to $96.29 per share, marking a one-year drop of 1.64%. The company is valued at $93.65 billion. Shares were down 1.10% at 88.650 euros in Frankfurt at 7:58 GMT on Thursday. According to CNN Money, the 18 analysts offering 12-month price forecasts for McDonalds have a median target of $98.50, with a high estimate of $115.00 and a low estimate of $88.00. The median estimate represents a +2.30% increase from the last price of $96.29.