The McDonald’s Model Goes On Trial

John Parra / Getty Images

In courtroom 238 in New York’s Federal Plaza this week, McDonald's executives testified publicly for the first time about shop-floor and top-level operations of their global franchise operation.

The legal case against the company, now being heard before the National Labor Relations Board, could up-end the existing fast food franchise model for all casual chains in the United States. McJobs are having their day in court.

What's specifically at stake: whether McDonald's corporate is responsible for labor conditions at restaurants that bear its name.

Since 2012, cooks and cashiers at the burger chain have protested for better pay and working conditions, while filing hundreds of charges of unfair labor practices before the country's highest labor board.

Spencer Platt / Getty Images

The workers say they experienced illegal retaliation — firings or discriminatory treatment by managers — as a result of the strikes and walkouts. The Service Employees International Union, the country's largest union for service workers, helped prepare the charges and pay the workers' legal fees.

Now the labor board's lawyers argue that McDonald's USA is equally liable — with franchise operators — for the alleged retaliation. The company denies responsibility, its lawyers arguing that McDonald's does not substantially control the day-to-day of line cooks, cashiers and drive-through workers.

But if the board's arguments win the day — or the months, as the trial is likely to stretch on — low-wage, first-rung workers could potentially unionize and bargain collectively with McDonald's as a result. That could in turn set precedent for the approximately 4.7 million people who work serving food and beverages in the United States to leapfrog franchise owners and negotiate with corporations themselves.

John Parra / Getty Images

On Wednesday, McDonald’s USA’s vice-president of U.S. franchising, Troy Brethauer, took the stand for his third day of testimony. He fielded questions on his familiarity with store-level layouts and alleged retaliation against workers.

Brethauer denied, as he did in previous testimony, granular knowledge of on-the-ground operations, saying he had not seen floor plans of stores, nor was he personally involved in the hiring, firing, or decision-making related to specific store employees.

The NLRB's general counsel has requested about 350 documents and business records from the company and has a long list of witnesses still to call, as the trial will move to two other cities before returning to New York for McDonald's HQ to argue its defense.

Beyond the trial, fast food workers continue to strike and march, most recently outside the Republican and Democratic debates. Thanks to the prompting of the protesters, the candidates, too, have been answering tough questions about wage and hour standards in low-wage jobs in America.

via IFTTT

Chipotle Gave Away More Than 3 Million Burritos To Prove They're Safe

Andrew Renneisen / Getty Images

Chipotle handed out around 3.5 million free burritos to prove their food was safe amid health concerns and to make its restaurants less "eerie" to customers, the chain's executives said Wednesday.

After outbreaks of norovirus, salmonella, and E.coli at Chipotle locations all around the country last year, sales tanked and the company closed all locations on February 8th to have an all-employee safety meeting.

The revamped safety guidelines were accompanied by an ongoing massive marketing push centered around sending out coupons for free burritos. Mark Crumpacker, Chipotle's chief creative officer, said at a Bank of America Merrill Lynch conference that the company had expected the promotion to "go viral" and that 2.5 million would redeem the coupons.

Over about five hours, he said, 5.3 million people requested coupons, and about two thirds of them actually used them — "an extraordinarily high number." Crumpacker said that Chipotle was planning on sending out 21 million pieces of direct mail, and that between six and 10 million had already been sent out.

Hartung said that another benefit of the coupons was that it made Chipotle locations — many of which were nearly empty before the Center for Disease Control declared the E.coli outbreak — feel less “eerie.”

“We also wanted to show that this is what Chipotle looks like and it was kind of eerie, and we've heard this from customers, they would walk by our restaurant and see, God that was always busy and now there is no line whatsover, that's not the case anymore,” Hartung said.

Chipotle's sales are still falling this month, but are starting to climb back this year overall after plunging 40% in January, the company's co-chief executive officer, Steve Ells, added at the conference.

Ells's comments came after Chipotle announced on Tuesday that it was anticipating its first quarterly loss ever as a public company — and that its comparable sales in February had declined 26%.

Comparable sales reached their low in the middle of January, falling about 40% on an annual basis in the middle of the month. Ells said now they got back up to negative 20% at the beginning of March before dipping again after a suburban Boston location closed after employees called in sick on March 8.

"Our teams did an awesome job, they followed the protocol fully. And as a result, they protected our customers and no customers were affected. So, this was a really good thing," he said.

Chipotle put a brave face on what otherwise looks like sobering data, saying in a presentation that a "comparable sales recovery [is] underway." After the Boston area closing, Chipotle chief financial officer Jack Hartung said, "our comps declined..to about (negative) 27%."

Chipotle Mexican Grill / Via file:///Users/matthewzeitlin/Downloads/Chipotle_BAML_Final.pdf

But since Chipotle previewed its quarterly earnings and reported its monthly sales, the company's stock is still down slightly and has fallen over 26% in the last year.

"Our earnings and margins are not going to be very impressive in the short term," Hartung said, pointing not only to the poor consumer perception of the chain, but also supply chain issues introduced by the burrito coupons that led to more food waste, along with higher marketing and legal costs spurred by a Department of Justice investigation into its food safety practices. Ells said that the company has gotten closer to identifying the source of the E.coli outbreak.

"We have many more fresh ingredients in the typical fast-food restaurants. And so, there are potentially a lot of sources for such an incident," Ells said. "We have been looking with the CDC, with our epidemiologist, with food safety experts, with local health departments and nobody initially could identify what the source was. We think we have a pretty good idea, but not definitively are we going to say what it was."

Ells said the changes, despite being costly and time-intensive, have been good not just for the safety of the food, but for how it tastes. "Every single ingredient now that we bring in has been scrutinized, every single cooking technique has been scrutinized and we've made a number of changes and a lot of these changes also have been for the better, I mean the food actually tastes better."

via IFTTT

Fear And Greed In VC Land

Steve Pope / Getty Images

via IFTTT

Kellogg Says There Is A Criminal Investigation Into Assembly Line Peeing Incident

flic.kr / Via Roadsidepictures

Cereal maker Kellogg said Monday that a criminal investigation has been launched into a video that appears to show a man urinating on a company assembly line.

Kris Charles, a Kellog spokesperson, said in a statement that the video, which appeared on WorldStarUncut.com on Friday, was recorded at Memphis facility in 2014.

The graphic video shows a man urinating in the factory and then pans to a Kellogg's logo. It appears to be shot by the urinating man himself.

Via worldstaruncut.com

Via worldstaruncut.com

Charles said that the products that could have been contaminated "include Rice Krispies Treats, granola clusters used in a couple of products, and a few other puffed rice treats that we no longer make."

Charles said that "any products that could have been potentially impacted would be very limited and past their expiration dates."

The company's stock was down about .5% in early afternoon trading on Monday.

"Food quality is of the utmost importance to Kellogg Company," Charles said. "We are outraged by this completely unacceptable situation, and we will work closely with authorities to prosecute to the full extent of the law.”

via IFTTT

Why Even Wealthy Black Students Have More Student Loan Debt

Michaeljung / Getty Images

For white students, family wealth acts as a shield from the burden of student loan debt, allowing them to start off their careers steps ahead of their peers. But the same isn't true for wealthy black students, according to a new study in the journal Race and Social Problems.

In fact, it's at the top of the wealth spectrum that the disparity between white and black student debt levels is the highest, the study found — a sign that student loan debt could sharply destabilize the black middle class, giving young blacks higher risk without the reward of being able to shield their own children from debt.

The Dartmouth-funded study, "Young, Black, and (Still) In Debt," found that while white youth at the top of the wealth spectrum had much less debt than their low-income and middle-class counterparts, the same wasn't true for black students.

Specifically, white families with a net worth of $150,000 had half as much student loan debt as those with a net worth of zero. But there was no difference in debt between zero net-worth black families and those with $150,000 in wealth. "The racial disparity in debt increases across the wealth distribution, such that black adults from wealthier families are more indebted than their white peers, relative to black adults from less wealthy families," according to the report.

At the root of the disparities are differences not only in income, but also in how black and white families acquire wealth (which includes home equity, savings, and inheritance) and pass it on to their children, the study said. Wealthy white families tend to have the kinds of wealth that are easily liquidated and also easily passed among generations, like stocks, savings, and home equity (which can be accessed in the form of home equity loans, according to the study).

The wealthy black families in the study had only half of the financial assets and less equity in their homes — making them less able to pay down their own debts and contribute readily to their children's educations and living expenses. Though wealthy white families contributed, on average, $12,000 to their child's college educations, wealthy black families gave just $4,200.

The result, the study's authors said, is the possibility that student loan debt could scar the already "fragile" black middle class — forcing young black students to drop out of college at higher rates and making it more difficult for them to acquire their own wealth.

The study shows both "how racial wealth inequalities are created, but also how they are compounded intergenerationally," said Fenaba Addo, an assistant professor at the University of Wisconsin-Madison and one of the study's authors, in a release.

Looking beyond just wealthy families, the Race and Social Problems study also found that sharp gaps among all families that are able to send their children to college: the median net worth of white families in the study was $101,376, while for black families, it was $9,497. On the whole among all income brackets, black students have almost 70% more student loan debt than their white counterparts.

via IFTTT

These Companies Are Eliminating Their Gender Pay Gaps

SpaceX COO Gwynne Shotwell, the highest paid woman at the company.

Michael Kovac / Getty Images

Elon Musk, CEO of aerospace tech company SpaceX, committed last month to eliminate the gender pay gap at the company, which has 4,000 employees.

"I was asked today if we'll audit pay," Musk said at an event about pay and gender co-hosted by enterprise software company Salesforce's CEO Mark Benioff In February. "We will do that."

Musk didn't comment on whether he would audit his electric car company Tesla as well, which employs about 10,000 people. A spokesperson told BuzzFeed News that Musk “plans to talk with Gwynne Shotwell, President and COO of SpaceX, on this topic and will take it from there.”

Musk is following Salesforce's lead in pledging to comb through salary data. On International Women's Day this week, Salesforce announced the results of its own internal pay audit for 17,000 global employees. The company spent $3 million to make salary adjustments for approximately 6% of workers to eliminate discrepancies, according to Cindy Robbins, executive vice president of global employee success.

"Moving forward, Salesforce plans to monitor and review salaries on an ongoing basis — making equal pay a part of our company’s DNA," Robbins wrote.

Salesforce has also invested in additional training for female employees, which resulted in a 33% increase in promotions for women at the company, according to Robbins.

Lculig / Getty Images

Salesforce and SpaceX are not alone in internally auditing pay for gender equity. Apple and Google have put resources towards ensuring equal pay, and Gap completed an internal audit last year. Computer chip manufacturer Intel announced it had found no meaningful discrepancies in pay after a review.

At Apple's shareholder meeting last month, Tim Cook said that a year-long, third-party audit for the company's 70,000 U.S. employees revealed women made 99.6 cents for every dollar a man makes, and under-represented minorities make 99.7 cents per dollar. Cook said the company was working to eliminate the gap and would release results of the survey every year so employees know where they fall on the pay-scale.

At Google, a spokesperson said the company's "People Analytics team" constantly analyzes performance, compensation, and promotion to "ensure that there is no gender pay gap at Google."

"Further, since we set salaries based on the market rate of the job (rather than a person's pre-Google salary), we find that, on average, women get larger pay increases than men when they join Google," said the spokesperson.

This strategy — paying based on the going market rate of a job, rather than an employee's previous salary — has been shown to help help reduce the gender pay gap, and some companies are looking into banning salary negotiations for that reason.

Still, even at Google, which uses market rates at hiring to avoid having to course-correct, salary transparency remains a taboo subject. Before leaving the company in 2015, Google engineer Erica Baker created a spreadsheet for workers to voluntarily share information about pay. She then ran into friction with a manager for collecting this data. Baker said on social media some employees asked for and received more equitable pay based on the spreadsheet, which is still live at Google, run by a co-worker of Baker's.

A Google spokesperson said that the company doesn't comment on specific cases of current or former employees and that employees are free to share salary information. (This is also the case everywhere, under U.S. labor law.)

Twenty percent of human resources managers said men are paid more than women at their companies, according to a recent survey by Human Resources software company CareerBuilder. Nationally, the median woman who works full time makes 79 cents for every dollar the median man makes, according to the most recent U.S. Census data.

California Now Has the Country's Toughest Equal Pay Law

A Marxist Social Policy Is Gaining Ground In Silicon Valley

Tech Takes The Lead on Parental Leave, But Low-Wage Workers Get Left Behind

via IFTTT

Hot Pockets Wants To Be The Next Trendy Health Food

Mike Mozart / Via Flickr: jeepersmedia

Nestlé, the world's largest food and beverage company with $92 billion in global revenue in 2015, wants to reinforce its "passion for nutrition," CEO Paul Bulcke said in an interview with BuzzFeed News.

Many of the brands owned by the 150-year-old Swiss food company clearly fit this mission: there's Gerber baby food, a cereal called Fitness, the vitamin drink Boost, and all that bottled water it sells under labels including Nestlé Pure Life, Poland Spring, S. Pellegrino, and Perrier. Perhaps Nestlé's Lean Cuisine would even fall under the nutrition category.

And then, there are Hot Pockets. The microwavable pouches of frozen meat and cheese wrapped in a pastry casing can run over 300 calories as a snack. They come in flavors like pepperoni pizza, Philly steak and cheese, and cheddar cheeseburger. Crust choices include garlic buttery, crispy buttery, croissant crust, seasoned crust, and pretzel bread — and for those watching their butter intake, there's whole grain crust too.

Hot Pockets are, for the average consumer, not the obvious choice for a nutritious snack — and that's something Nestlé wants to change about the 33-year-old brand.

"There's something very important happening. We call it millennials, but at the end of the day it's new, refreshed expectations of consumers," Bulcke said. "Does [Hot Pockets] play into those new expectations of closeness, freshness, organic, natural, also clean label?

"They want to have simplicity. These are the things we have to rewire."

Nestle / Via youtube.com

Ingredients in a Ham 'n Cheese Hot Pocket

Nestle / Via nestleprofessional.us

Hot Pockets has been aware of this perception issue for some time. Some of the things the brand (and other brands at Nestlé) is reevaluating include calories, portion sizes, simplifying the ingredients list, and satiety of the pockets. "There's a lot of science going into it," Bulcke told BuzzFeed News.

In 2013, Nestlé gave Hot Pockets a "foodie" makeover, emphasizing the “premium cuts of meat” and "real cheese" on the menu. It launched ads featuring celebrities including Snoop Dogg, Kate Upton, and Larry King to attract the attention of millennials. From 2013 to 2015, it also removed artificial flavors and reduced sodium levels by 10%. Last year, it introduced bite-sized pockets.

Despite Nestlé's recent efforts, sales continued to lag. In 2013, dollar sales of Hot Pockets fell by 2.2%, according to IRI, a Chicago-based market research firm. In 2014, the decline worsened to 10.2% to about $862 million. Last year, as dollar sales recovered somewhat, IRI data show that volume sales (measured as a UPC scan, regardless of package size) continued to fall.

So, more changes are in the works. "There is, I think, in Hot Pockets more to come," Bulcke told investors in February. Specifically, trendy new Hot Pocket varieties with "interesting and bold flavors, inspired by our deep study and tracking of food trends," according to a spokesperson.

Nestlé would not reveal what it believes might make a fitting modern Hot Pocket in 2016 — perhaps bulgogi? carnitas? kale? samosas? chicken tikka masala? We'll find out soon. A launch is planned for the spring.

Upton and Snoop sing about hot pockets.

Neslte / Via youtube.com

As it makes nutritional tweaks to its foods, Nestlé has a "60/40" rule, meaning "while enhancing nutritional value" of a product, at least 60% of people in a blind taste test have to pick Nestlé's product over a competitor's.

Hot Pockets, Bulcke said, can be part of a healthy diet if people understand what they are eating. "Now, don't eat four of them at the same time. That's the problem a little bit: there's no such thing as bad food, per se. There's bad habits and bad diets."

Hot Pockets were launched in 1983 by an Englewood, Colorado company called Chef America. Nestlé acquired the company in 2002 for $2.6 billion as it tried to boost its frozen food business. When the deal was made, Nestlé's then-chief executive Peter Brabeck-Letmathe said in a New York Times story, ''Chef America is an ideal and strategically important complement to our own frozen-food activities in the U.S.A."

Yet as microwavable food gradually fell out of fashion, so did Hot Pockets.

"We have been doing quite a bit already in this area, but I feel there's so much more upside to be done there to make it relevant. It doesn't mean you reposition a brand, you make it just answer what people expect from the brand," said Bulcke.

Instagram: @alcorcong

LINK: A New Frontier In Low-Carb Snacking: Meat Snacks, Like Lunchables For Adults

LINK: Why Walgreens Got The Exclusive On Hot Dog–Flavored Pringles

via IFTTT