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(Bloomberg) — Labor organizers have a message for McDonald’s Corp.: Nice try, but the protests will continue. The Fight for $15 campaign, which began calling for fast- food chains to raise wages and allow workers to unionize in 2012, wasn’t mollified by McDonald’s announcement Wednesday that it would boost pay. In addition to protests scheduled for April 15, the group plans to gather outside McDonald’s restaurants on Thursday to criticize the company for not going far enough.
“There’s still millions of families in poverty due to McDonald’s not raising to $15,” said Kendall Fells, the campaign’s organizing director. “We’re going to show McDonald’s this movement won’t stop until we get what we deserve.” McDonald’s said Wednesday that it will raise pay at U.S. company-owned stores, which account for about 10 percent of its more than 14,000 domestic locations, by at least $1 above the local minimum wage. The Oak Brook, Illinois-based company also will begin offering vacation benefits as part of the plan, which takes effect on July 1.
By the end of 2016, the fast-food chain expects workers at company-owned locations to earn more than $10 an hour on average. McDonald’s said about 90,000 employees would get the raises. Employees at the approximately 90 percent of restaurants run by franchisees will not.
In its pledge to improve pay and benefits, McDonald’s joined a growing roster of major U.S. employers. In recent months, Wal-Mart Stores Inc., Target Corp. and TJX Cos. have all vowed to boost pay to at least $9 an hour this year.

Creating Inflation?

McDonald’s higher wages at company locations could force franchisees to follow suit, particularly if they’re operating in a market alongside restaurants owned by the corporation, said Richard Adams, a fast-food consultant and former franchise owner. In the end, that could be good for McDonald’s, he said. Higher wages would force franchisees to raise prices, which would mean higher royalty payments sent back to the corporation. “They’re basically creating inflation,” he said. “If the franchise down the street stays with the government-mandated minimum wage, there will be pressure.” The pay hike marks a dramatic early move for new Chief Executive Officer Steve Easterbrook. After his promotion to the top job last month, Easterbrook has been working to reignite growth at the fast-food chain. Other efforts include a test of all-day breakfast at San Diego restaurants and an touch-screen system that lets customers customize burgers and sandwiches.

Sales Slump

McDonald’s has been grappling with sluggish sales in its home market and a health scare in Asia, where a supplier was accused of repackaging old meat after it was past its expiration date. U.S. same-store sales fell 4 percent in February, a worse decline than analysts had predicted.
The pay raise is part of a push to transform McDonald’s into a modern, progressive burger company, said Peter Saleh, an analyst at Telsey Advisory Group in New York. That means good food, updated restaurants and better service, he said. “If you’re going to underpay your people, I don’t see how you can have great service,” he said. “They had to do something.” Still, the raises didn’t far enough for some workers. Kwanza Brooks, a McDonald’s employee who makes $7.25 an hour at a company-owned store in Charlotte, North Carolina, dismissed the move as public-relations gimmick. “It’s a P.R. stunt,” Brooks, 38, said on a conference call organized by the Fight for $15. “And that P.R. stunt isn’t going to pay my gas bill this month, or get my landlord off my back.”

To contact the reporter on this story: Craig Giammona in New York at cgiammona@bloomberg.net To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net James Callan