Dive Brief:
- The National Restaurant Association confirmed Thursday that McDonald’s has left the association over policy differences, after the chain's top executive criticized tipped wages for creating “an uneven playing field” in the restaurant industry.
- On CNBC earlier this week, McDonald’s CEO Chris Kempczinski was critical of the tip credit — a key legislative priority of the NRA. He told the channel, “if you are a restaurant that allows tips or has tips as part of your equation, you're essentially getting the customer to pay for your labor.”
- Neither the NRA nor McDonald’s responded immediately to a request to clarify if the Golden Arches’ departure was caused specifically by disagreements over the tipped subminimum wage.
Dive Insight:
McDonald’s decision to leave the NRA could reflect divergent priorities between different segments of the restaurant industry, as QSR brands face increased competition from casual dining chains — which typically pay tips.
Kempczinski emphasized the disparity between the federal subminimum wage of $2.13 an hour and the federal minimum wage of $7.25.
“Part of what I think we need to do in this minimum wage conversation is, let's start with everybody should be paying the same minimum wage, whether that's tipped or non-tipped,” Kempczinski said.
Kempczinski also added that in states like California, Minnesota, Nevada and Washington, which all require employers to pay the full state minimum wage, “poverty levels decrease. We know that turnover levels go down. We know that actually it doesn't lead to any job loss. So there's already been a model that shows that tipped wages can be at the same as the federal minimum wage.”
Kempczinski said McDonald’s was open to raising the federal minimum wage and that there should be one model for wages across all 50 states.
This marks a significant ideological break from the NRA, which has made the preservation of the tip credit a strategic priority for years. The NRA celebrated the recent move by Washington D.C.’s city council to gut a referendum ending the tipped minimum wage. In 2024, the association worked to halt legislation that challenged the tip credit in a large number of jurisdictions.
The NRA, in comments emailed to Restaurant Dive, said it is committed to “representing the full spectrum of the restaurant industry.”
A rift between the association and the largest QSR brand in the country is a potentially major shift in restaurant politics. During the fight over AB 257 in California — which would have established a higher sectoral minimum wage and a stronger standards-setting commission in fast food than was eventually created through AB 1228 — both McDonald’s and the NRA spent lavishly in opposition to the legislation.
McDonald’s loaned more than $10 million to the referendum campaign to abolish AB 257, California records show. The NRA likewise loaned millions of dollars to the referendum effort, according to election records.
One Fair Wage, a group that advocates for the abolition of the tip credit, sought to heighten the political split in a statement on the McDonald’s departure.
“The subminimum wage is an unjust system that creates two separate wage regimes. Most businesses — from small retailers to mom-and-pop shops — are required to pay a full minimum wage,” OFW wrote in a statement. “Yet NRA-aligned full-service chains continue to pay a subminimum wage, forcing workers to rely on tips and customers to subsidize payroll.”
