McDonald’s Falls on Obama Call to Raise U.S. Minimum Wage

McDonald’s Corp., the world’s largest restaurant chain by sales, fell the most of any stock in the Dow Jones Industrial Average after President Barack Obama announced a plan to raise the minimum wage.

The shares declined 1.2 percent to $94 at the close in New York. The Oak Brook, Illinois-based company slumped 12 percent last year, compared with a 2.6 percent drop for the Standard & Poor’s 500 Restaurants Index.

Obama’s call to raise the federal minimum pay is helping to drive McDonald’s shares lower today, Peter Saleh, a New York-based analyst at Telsey Advisory Group, said in an interview. The blizzard that lashed the U.S. Northeast at the end of last week possibly hurting the company’s sales, and Buffalo Wild Wings Inc.’s report yesterday that same-store sales are declining this year, may also be affecting McDonald’s stock, he said.

“It’s a whole slew of factors that’s driving it lower today,” said Saleh, who doesn’t have a rating on McDonald’s stock.

Obama, in his State of the Union address yesterday, called for a federal minimum wage increase to $9 an hour, from $7.25. He also proposed tying the minimum wage to the cost of living. The current minimum wage has been in effect since 2009.

McDonald’s and its franchisees don’t disclose what they pay their restaurant workers. Its franchisees, as well as other restaurant chains, such as Wendy’s Co. and Jack in the Box Inc., spend money lobbying against minimum-wage increases.

Dollar Menu

McDonald’s, which has about 14,000 U.S. locations, has been vying with other eateries to lure cash-strapped Americans. Earlier this month, the chain reported that U.S. same-store sales gained 0.9 percent in January as it advertised its Dollar Menu and tested new items to help boost sales.

Buffalo Wild Wings reported yesterday that same-store sales were down 2.8 percent at company stores and 1.7 percent at franchised locations through the first six weeks of the first quarter. Minneapolis-based Buffalo Wild Wings has about 900 stores in the U.S. and Canada.

The shares fell 5.6 percent to $76.55 for the biggest decline since Oct. 24.

(Updates with closing share prices from second paragraph.)
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