Gavin Newsom Hammered For ‘Bread Exemption’ That Benefits Friend

[Office of the Governor of California, Public domain, via Wikimedia Commons]

Maybe Gavin Newsom is the perfect protege for Joe Biden after all. The two appear to have the same penchant for having those close to them receive huge windfalls related to their pal being in charge.

While Biden’s banana republic revolves around paying voters and family members influence peddling, Newsom’s just exempted his rich friends from laws aimed at “helping the working class.”

On April 1, fast food restaurants across California will be forced to pay their workers $20 an hour. That is, all fast food places except one lucky corporation that received an exemption because it bakes bread, which just so happens to be deeply connected to the governor’s good friends and major donors. 

“The restaurant chain Panera Bread,” writes The New York Sun, “will be free from paying its employees an extra four dollars an hour that a new law will require of all fast-food restaurants in California thanks to the chain founder’s cozy relationship with Governor Newsom.

The California law will raise the state minimum wage at fast-food restaurants to $20 an hour from the existing amount of $16 an hour now. Chains that bake and sell bread as standalone items, though, are exempt from that rule — benefiting the likes of Panera Bread, whose 125 restaurants are owned by billionaire business titan Greg Flynn.

Governor Newsom advocated for the exemption, according to Bloomberg News. That might have something to do with the fact that Mr. Flynn, who runs the world’s largest franchisee operator of restaurants and fitness clubs, is a longtime donor to the governor. His California holdings include 24 Panera Bread spots.”

Bloomberg described details of Newsom’s apparent corruption. 

Behind closed doors, he urged the governor’s top aides to reconsider whether fast-casual chains such as Panera should be classified as fast food, according to people familiar with the discussions, who asked not to be named because the talks were private.

While that plan wasn’t adopted, the Service Employees International Union, a labor group that was the driving force behind the bill, decided to accept a narrower carve-out as the talks progressed — one that would only apply to restaurants operating bakeries. That position was adopted as a means of winning the governor’s support for the legislation, said a person with knowledge of the discussions. The rationale was the governor’s longstanding relationship with a Panera franchisee, the person said.

Over the years, Flynn’s donations to Newsom’s political campaigns have included $100,000 to fight off a conservative-led recall effort and $64,800 to support the governor’s reelection in 2022. Flynn has been known to tout his relationship with Newsom, according to people familiar with the matter, with one saying the fast-food entrepreneur has said he can reach the governor via text.

A business connection goes back to 2014, when Flynn acquired a Napa Valley resort managed by Newsom’s hospitality company. Newsom, who was then serving as California’s lieutenant governor, reported an undisclosed amount of income from Flynn’s company that year. The management contract began under the previous owners, the Getty family trust, and Flynn decided not to renew it about a year into his ownership, said a person familiar with the decision.

The Daily Caller reported that “Flynn is worth at least $1.1 billion and controls an empire of 2,600 franchise locations for brands like Applebee’s, Pizza Hut, Taco Bell and Wendy’s, according to Bloomberg. The only other franchise brand that Flynn owns in California is Applebee’s.

The billionaire originally sought to have Panera not be considered a fast food restaurant, arguing it was a fast-casual chain, according to Bloomberg. The Service Employees Union, which was orchestrating the drive for the bill, later decided instead to create the bread maker carve-out to convince Newsom to sign the bill due to the governor’s relationship with Flynn.”

The shocking aspect of the bread exemption is not the corruption, but the brazen nature of the corruption. The National Review noted that “the bread exemption is so narrowly tailored that it doesn’t even include bagels or croissants. ‘Panera appears to be the largest chain by number of locations in California and countrywide to benefit from the exemption,’ the story says. And restaurants can’t start making bread now; only restaurants making bread by September 15, 2023, qualify.

The most troubling part of the story, though, is a quote from Michelle Korsmo, the president and CEO of the National Restaurant Association. ‘She described the provision as an example of why her organization’s members should develop political connections to seek better legislative outcomes,’ the story says. ‘You may be celebrating or you may be lamenting the bakery exemption,” Korsmo said. ‘But remember, all of that comes through relationships.’

Korsmo is responding to incentives here, and she’s probably giving the correct advice to her California members. But the fact that such advice is necessary is the troubling part. Restaurant owners should not need to be friends with politicians to be able to run their business as they please.”

The legislation grants authority to a Fast Food Council consisting of ten members to establish the minimum wage, stipulate working conditions, and set training standards for employees in the fast food industry. Following the wage hike, several restaurant chains, including Chipotle and McDonald’s, indicated their intention to increase prices in order to offset elevated costs.

Others have begun to cut workers:

Panera Bread, and Gavin Newsom’s billionaire friend, however, are going to be just fine. 

[Read More: Carville Makes A Surprise Endorsement]

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