American Cities Shouldn’t Tell Chipotle And McDonald’s How To Run Their Businesses

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City governments need to cut back on their mandates over how national franchises like Chipotle, McDonald’s, and Shake Shack do business. At the very least, they should leave it up to them to decide how they manage work schedules, and align work requirements with customer demands.

That’s one of the fundamentals of an effective business strategy; and at the core of the free enterprise system America claims to operate under.

Letting private companies decide how to run their day-to-day operations is one of the many things that separates the American system from socialist countries such as Cuba and Venezuela; countries where too much restriction on the market has created some serious problems.

It seems like local governments are determined to push America towards a more socialist ideal through passing legislation that mandates work schedules and labour pay, among other things. In particular, the New York City government passed minimum wage hikes with the intention of creating a “living wage” and the “Fair Workweek Laws.” These laws force food service providers such as Shake Shack, McDonald’s and Chipotle to prepare working schedules ahead of time.

The problem is that it takes a great deal of guessing of market conditions to prepare these schedules in advance, in some franchise segments.

And a good luck to enforce them.

Even so, New York City has been forceful in their approach to the laws and has gone after companies such as Chipotle. Wall Street didn’t respond too well, with shares in companies like Chipotle and other food service franchises dipping a couple of week ago, following the news.

 “The main reason behind Chipotle’s price decline was a report that the City of New York is suing Chipotle for violation of the recently-enacted Fair Workweek Law,” says equity analyst John Zolidis. “This law is intended to protect hourly workers by prohibiting companies from excessively changing their schedules at short notice.”

These laws impose a serious burden on the sector. “Our understanding is that this new regulation both makes staffing more cumbersome for companies but also requires increased costs related to compliance, Zolidis adds. “The City of New York’s action virtually ensures that Chipotle’s operating costs related to staffing and compliance are going up.”

The news about Chipotle spread and started to affect other fast food service providers. Shake Shack also had their stock value drop, following the news that NYC is after Chipotle. Shake Shack, much like Chipotle, employs hour employees in New York City and so they would need to spend more on compliance and staffing too.

Still, Jeff Kreisler, the Editor-In-Chief of Peoplescience.com’s, believes that providing advance scheduling is a good idea. “Providing an advanced scheduling and some sense of income and employment certainty is a fantastic, low-cost way to alleviate the financial stress and concern faced by frontline employees which causes issues of low productivity and workplace safety,” he says. “Financial precarity is now recognized as a real concern for workers of all income level and the impact on organizations affects their bottom lines as much as health and wellness. “

But it should be left up to the companies to do so, rather than mandated by law. “It would be better if organizations just choose to be better – for their employees and their shareholders – but… not all have done so yet,” he says. 

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