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Wendy’s Says Income Inequality Is Hurting Sales. Maybe It Should Pay Its Workers More?

The chain’s CEO says low-income Americans are eating less fast food due to wage stagnation

A Wendy’s restaurant sign in Vancouver Shutterstock

Sales at Wendy’s are down, and the fast-food chain’s CEO says income inequality is to blame. On the company’s quarterly earnings call earlier this week, chief executive Todd Penegor pointed to low-income households not eating as much fast food as one cause of the chain’s sales slide — which is somewhat ironic considering the fast-food industry is notoriously one of the lowest-paying industries in the U.S.

“If you look at the economy in total, there’s a lot of great tailwinds, right?” Penegor said, according to a transcript of Tuesday’s call. “We’re seeing almost 10 years of economic recovery, we’re seeing lowest unemployment levels in a long time, high consumer confidence, and median households finally at record levels. But as you look at that income growth, it’s skewed significantly to higher income households... on the low-end, you start looking at folks with rent and healthcare costs starting to rise that are really eating into some of the headway that they’re making.”

Penegor noted that around 40 percent of the fast-food industry’s customer base earns $45,000 or less — a demographic that would include fast-food workers themselves, including Wendy’s employees. The average fast-food worker earns approximately $20,000 per year, per the Bureau of Labor Statistics, while more than half of fast-food workers in the U.S. need government assistance to make ends meet, according to a 2015 study by researchers at UC Berkeley.

Earlier this year, employees at a Wendy’s in Wisconsin staged a walkout, saying the store’s low wages — which started at around $8 an hour — made it difficult to attract and retain staff, leading a skeleton crew to have to work 65 hours or more a week to keep the restaurant running. Wendy’s did not immediately respond to a request for comment on its minimum pay for hourly workers — but for every dollar the average Wendy’s employee makes, Penegor earns approximately $55.

Though millions of fast-food employees still struggle to earn a living wage, in recent years, labor movements like the Fight for $15 have made major strides in improving pay for low-wage workers. Most recently, in Tuesday’s midterm elections, Missouri voted to increase its minimum wage to $12 by 2023, and voters in Arkansas approved a measure to hike its minimum wage to $11 by 2021.

Wendy Says Robust Economy Isn’t Helping Low-Income Diners [Bloomberg]

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