JANUARY 2021 - HOW MCDONALD'S UTILIZES FRENCH PUBLIC SUBSIDY PROGRAMS TO BOOST PROFITS AND HARM WORKERS AND THE FRENCH STATE - REACT
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JANUARY 2021
HOW MCDONALD’S UTILIZES FRENCH PUBLIC SUBSIDY PROGRAMS TO BOOST PROFITS
AND HARM WORKERS AND THE FRENCH STATE
McProfits
-
Table of contents
INTRODUCTION � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 04
• MCDONALD’S HIGH PROFIT, LOW WAGE MODEL ������������������������������������������������������������������������������������������������ 08
- McDonald’s: The Global Restaurant Leader � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 09
- McDonald’s France, a significant profit driver for the McDonald’s Corporation � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 14
- McDonald’s low wages and limited profit-sharing � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 16
• MCDONALD'S RELIANCE ON PUBLIC EMPLOYMENT-SUPPORT MECHANISMS TO INCREASE PROFITS � � � � � � � � � � � � � � � � � 22
- Conversion of the Tax Credit for Competitiveness and Employment into a
reduction in social contributions: An even more profitable mechanism for McDonald’s � � � � � � � � � � � � � � � � � � � � � � � � � � 23
- More tax benefits for McDonald’s low-wage model � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 27
- McDonald’s increases profits by hiring under state-aided employment contracts � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 28
Founded in 2010, ReAct’s mission is rooted in a shared principle: the primary reason for both social and envi- - State-supported pandemic programs and post-crisis stimulus plan: McDonald’s wins � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 29
ronmental injustice lies in the dominance of large companies’ interests over the people’s interests. That is why - Bonus-malus system favors McDonald’s precarious model � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 32
ReAct organizes workers and communities who face these injustices to build power and the capacity to defend > McDonald’s High Staff Turnover � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 33
the rights and interests of the majority from narrow corporate interests. ReAct supports the development of
> Permanent Contracts are not meaningful at McDonald’s � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 35
democratic organisations using community organizing methods and helps connect these organizations at local,
state and international levels. ReAct believes that these types of civic and union organizations are a prerequisite • MCDONALD’S JOB CREATION MYTH � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 37
to help workers and other affected people develop skills for direct, non-violent action aimed at exposing and - McDonald’s failure to live up to its French job commitments � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 37
challenging the harmful practices of multinational corporations. - Behind McDonald’s job creation myth, McDonald’s workers face
understaffing and poor working conditions � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 40
Since 2016, ReAct has supported both trade union and civil society organizations calling out McDonald’s poor - McDonald’s reaps benefits from partnerships with French authorities at all levels � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 43
practices in a variety of areas including worker mistreatment, the use of corporate subsidies, and poor environ- > McDonald’s partnership with the French state � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 43
mental practices. As part of these efforts, ReAct has conducted in-depth research based on a variety of sources
> Regional Partnerships � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 44
including McDonald’s financial and corporate filings and other publicly-available data as well as through exten-
sive interviews with McDonald’s workers, industry experts and other stakeholders. ReAct’s activities both amplify
RECOMMENDATIONS � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 46
the global “Fight for $15 and A Union” campaign, launched in 2012 in the US where McDonald’s is headquarte-
red and augments the campaign’s work carried out in over thirty countries around the world, with the support
of allied national and international trade unions and civil society organizations. ReAct is grateful to the US trade ENDNOTES � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 49
union Service Employees International Union (SEIU) and to attorneys Anne-Marie Pecoraro and Rodolphe Bois-
sau for research support for this report. APPENDIX 1: McDonald’s France SAS Revenue Sources � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 61
APPENDIX 2: McDonald’s in France - Organization Chart and Ownership Structure � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 63
© Shutterstock
APPENDIX 3: Analysis of McDonald's restaurant revenues and profits in France � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 64
APPENDIX 4: E
stimate of the "Crédit d’Impôt Compétitivité et Emploi" received
www.projet-react.org by McDonald’s France and McDonald’s restaurants � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 69
- McDonald’s has been criticized for its conduct du- system relies on low wages and precarious jobs, as
Introduction ring the ongoing health crisis. In France, when the
coronavirus lockdown was imposed by the French
government, McDonald’s refused to completely
well as on high rents that the corporation charges its
franchise restaurant operators around the globe.22
shutter all restaurants, despite the risks faced by With this backdrop, this report examines the ways
its workers. And across the globe, workers have in which McDonald’s handsomely benefits from
COVID-19 has shaken the global economy, disrupting commerce in every industrial sector and cau-
raised the alarm about the lack of personal protec- French corporate support to generate significant
sing widespread anxiety as unemployment and uncertainty rise. At a time when the French State and
tive equipment, the inability to socially distance and profits without providing the number of jobs to
its citizens are facing incredible challenges to limit the effects of the pandemic-induced economic
crisis, some companies, professional associations and corporate lobbies have promoted measures about the intense pressure to work despite unsafe which it publically commits. In addition, the report
that increase the burden on workers and the pressure on public resources. For example, some have conditions, prompting workers to strike and take details how the company, despite its profits, denies
called to increase the workweek,1 reduce employers’ contributions to the social safety net, or reduce other actions to raise these concerns publically. paying employee profit-sharing to many of its restau-
the VAT.2 Others are expressing aspirations for a new project of society,3 with some critiquing the rant employees and fails to improve the low-wage,
conduct of companies during the pandemic and requesting actions from corporations in return for These recent worker actions draw attention to just the part-time and precarious nature of McDonald’s jobs.
state-support programs.4 While others are calling for broader changes to increase the level of tax, so- most recent examples of the ways that McDonald’s At a time when politicians and broader civil society
cial and environmental justice by questioning the rationale and mechanisms that allow for corporate exploits its global workforce. For instance in the US, a groups are calling on the government to require com-
tax breaks, state aid and private-public partnerships, given the uncertainly of whether these programs majority of McDonald’s workers must rely on govern- mitments and demonstrable progress on meeting
actually benefit the French people.
mental aid to survive on the low wages they earn.16 those commitments from corporations in return for
The "Fight for $15 and a Union" campaign, launched tax-payer funded corporate support, the McDonald’s
These debates should be centered on the conduct the technology sector.8 In terms of employment, the
in 2013, has already enabled 22 million workers to be- case is an example of how corporations take advan-
of large multi-national corporations, often domiciled fast food giant is the second largest global private
nefit from minimum wage increases in several states tage of the system, furthering tax and social injustices.
in other countries like the United States, who extract employer with more than two million employees.9
and cities,17 but the campaign continues to press to im-
massive profits from French public resources to the And France plays a special role In McDonald’s glo-
prove wages in other parts of the country. In addition Specifically, the report delves deeply into the com-
benefit of largely-foreign shareholders. These monies bal domination, wielding significant market power
to wages, the campaign has successfully highlighted pany’s profitability and distribution of dividends, and
are syphoned from French corporate subsidiaries of- in the country. France is McDonald's second lar- McDonald’s mismanagement of health and safety, the significant contribution that the various types
ten via tax avoidance schemes without distributing a gest market in terms of sales, falling just behind the its failure to address the prevalence of sexual haras- of French restaurants – whether corporate-owned,
fair share to French workers or to the State, and wi- United States.10 And in France, the company employs sment and the lack of worker representation in its 50/50 joint ventures or franchised – make to the
thout ensuring safe and sustainable working condi- more than 75,000 in its nearly 1,500 restaurants.11 home country.18 In the United Kingdom, workers have corporation’s global success. Over the past ten
tions or complying with environmental regulations.
denounced McDonald’s use of zero-hour contracts
As the world’s largest restaurant chain, McDonald’s
© NnoMan
Yet, despite the company’s financial success, Mc- and low wages.19 Across the globe, McDonald’s wor-
conduct in France has drawn particular scrutiny from
Donald’s employees across the world report unsafe kers have boldly come forward to publically describe
the French authorities, the media and its workers, both
and precarious working conditions in return for low a pervasive culture of sexual harassment at McDo-
about the company’s conduct during the height of
wages.12 In France, McDonald’s workers have been nald’s, highlighting the lack of concrete measures to
the coronavirus outbreak as well as in previous years.
denouncing deteriorating working conditions, inclu- end this abuse in the burger giant’s workplaces, lea-
Workers, trade union federations and NGOs have re-
ding imposed part-time work, work speedups, health ding multiple trade union federations to file a com-
gularly denounced McDonald’s record of misconduct,
and safety risks, and low wages.13 Most recently, Mc- plaint against McDonald’s with the Organization for
including tax avoidance in countries around the globe,
Donald’s workers have denounced numerous cases Economic Co-operation and Development (OECD) in
worker mistreatment and harassment in its restau-
rants, mismanagement of its waste and the detrimen- of sexist behaviors, sexual and moral harassment 2020.20 For the past six years, McDonald’s workers,
tal consequences of its activities on the environment.5 and sexual abuse at McDonald’s workplaces, and the trade union federations and civil society organisations
company’s failure to take appropriate action to reme- have participated in several international days of ac-
McDonald's conduct matters because of its unrivaled dy these abuses.14 McDonald’s has also been pointed tions, involving workers in more than thirty countries.21
footprint over the world’s economy. The company is out for its gender equality policy: while women ac-
the global fast food leader with more than 38,000 counts for 58 percent of its workforce, McDonald’s In addition, numerous reports published in recent
restaurants in 119 countries,6 serving more than 70 has entered into franchise agreements with male years have highlighted the McDonald’s poor tax, so-
million customers per day.7 In 2019, the burger giant operators for 95 percent of its restaurants and only cial and environmental practices, as well as its extrac-
was the most valued brand in the world outside of seven percent of restaurant operators are women.15 tive business model. As designed, the McDonald’s
/4 © ReAct 2021 © ReAct 2021 /5
years, the McDonald’s Corporation has distributed sequent economic stimulus plan implemented by the portrayed itself as a significant job creator in France,
US$76 billion to shareholders in the form of share French government. For example, the Youth Plan may making public pronouncements about both the quan-
buybacks and dividends. In contrast to many large have yielded €45 million in public subsidies to McDo- tity and quality of the jobs created at the burger giant.
French firms, McDonald’s Corporation has continued nald’s for hires that the burger giant would have had to Specifically, the company has committed to create a
to reward shareholders during the pandemic – with make anyway to compensate for its high staff turnover certain number of new jobs each year and has ente-
approximately US$4.6 billion in dividends and share rate during the first six months since its implementa- red into a number of partnerships with French public
buyback payments distributed over 2020 – while its tion. Another proposal, which would halve the required authorities at the federal, regional and local levels
workers have publically demanded that the company contribution on Added Value paid by businesses based on these job creation promises. While the
provide them necessary protective equipment. At the [Cotisation sur la Valeur Ajoutée des Entreprises], is company benefits both financially and reputationally
same time, McDonald's restaurants in France have estimated to save McDonald’s more than €11 million from public job creation commitments that undergird
generated more than €2.3 billion in profits between in 2021. Finally, McDonald’s restaurants may save these public-private partnerships, this report uses
2011 and 2019. Yet, the vast majority of McDonald’s another €10 million in social contributions under the McDonald’s own data to show that the corporations’
restaurants in France do not pay any legally-man- new unemployment insurance bonus-malus system. reality falls short of its hype by at least 10,000 posi-
dated profit-sharing to workers because of the artifi- tions over the last eight years. Worse yet, behind the
cial fragmentation of its restaurants into entities with Despite the tax-payer funded financial support, this re- company’s job creation myth, McDonald’s workers
© iStockphoto.com / Makkayak
fewer than 50 Full-Time Equivalent (FTE) employees. port shows that McDonald’s does not use the financial report understaffing and poor working conditions.
For instance, among the 25 most-profitable McDo- savings generated by the company’s participation in
Finally, this report concludes with direct demands on
nald’s restaurants that have disclosed their annual ac- these government programs to raise wages, syste-
McDonald’s to redirect profits to improve workers’
counts between 2015 and 2019, six or fewer of these matically pay employee profit-sharing to workers, or
pay, address its employee profit-sharing avoidance,
restaurants made employee profit sharing payments, improve its business model to rely less on low-wage,
prioritize workers’ health and safety, adopt transpa-
despite generating restaurant-level profits of between part-time and precarious jobs. For example, McDo-
rent reporting of its public job creation commitments
€570,000 and €1 million annually. In 2019, the most nald’s net employment growth has been minimal over
and its receipt of public monies through state-sup- sions, attention must be drawn to the role and res-
recent year for which data is available, only four of the last eight years, especially compared to the com-
port programs. Fundamentally, McDonald’s needs to ponsibility of corporations in the recovery and requi-
these 25 restaurants made profit-sharing payments. pany’s revenue growth over the same period. Speci-
invest in improving the quality and pay of its jobs ins- rements in return for state-support programs. Now
fically, McDonald’s revenue grew by over 27 percent,
tead of syphoning off billions to reward shareholders. is the time that the French government revamps
These massive profits are boosted by corporate sup- nearly double its workforce growth of 15 percent. In
the rules so that these multinationals provide their
port programs that have been implemented by public addition, the average number of Full-Time Equivalent
In addition, this report makes recommendations ai- fair share to both workers and the French State.
authorities and funded by taxpayer euros. This report (FTE) jobs per restaurant has actually fallen in the past
med at French regulators and policymakers including
investigates the ways McDonald’s takes advantage few years despite the company’s job creation claims.
reforming existing job creation schemes, corporate
of tax credits and programs that allow for reductions And while McDonald's boasts about the percentage
tax rebates, programs that reduce employers’ social
in required social contributions, particularly those of its workers under permanent contracts, the com- contributions, and public-private partnerships at all
aimed at expanding employment opportunities. pany’s turnover and resignation rates are sufficiently government levels. These programs should be rede-
Specifically, the report examines in detail the impact of high to render the job stability normally associated signed to ensure that receipt of publically-financed
past programs like the Tax Credit for Competitiveness with permanent contracts merely an illusion. Mc- euros is conditional upon concrete commitments
and Employment which has allowed McDonald’s to Donald’s staff turnover rate was 65 percent in 2019. and demonstrable progress towards those goals, as
save between €290 and €400 million over the 2013- And McDonald’s has stopped reporting data on its opposed to being used to increase corporate pro-
2018 period, while restaurants’ profits have substan- resignation rate and the rate of job separation within fits or to increase returns to shareholders. Further,
tially increased. The transformation of this tax credit the probation period, both of which were far higher these tax-funded corporate supports should neither
into a reduction of employers’ social contributions in than the rates for the hotel and food service sector be provided to companies like McDonald’s that fail
2019 will likely lead to an estimated €135 million in overall in 2013, the latest year this data is available. to live up to their tax, social and environmental obli-
annual savings for McDonald’s in the coming years. gations nor granted in exchange for mere promises.
At a time when the priority of the French govern-
In addition, the report examines the impact on McDo- ment’s stimulus plan is job recovery, the report In the ongoing health and economic crisis, the French
nald’s of the state support programs implemented also examines the validity of McDonald’s job crea- government’s stimulus plan focuses on economic
during the COVID-19 lockdown as well as in the sub- tion claims. For many years, McDonald's France has recovery and job creation. As part of these discus-
/6 © ReAct 2021 © ReAct 2021 /7
-
MCDONALD’S HIGH PROFIT, McDonald’s:
income, or profit, of more than US$5.2 billion on
average over the same period, as displayed in
LOW WAGE MODEL
The Global Restaurant Leader
Figure B.28 In 2019, the company registered an
Over the past ten years (2009-2019), McDonald's all-time historic global profit of US$6.03 billion.
Corporation LLC’s (hereafter McDonald’s Corpo-
ration) global systemwide sales – the combined For its shareholders, holding McDonald's stock
sales at corporate-operated and franchisee-ope- (NYSE: MCD) is an extremely profitable invest-
As the largest restaurant chain in the world, McDonald’s dominates the fast food industry, with total
rated McDonald’s locations – increased by 38 ment. Over the last ten years, McDonald’s stock
systemwide sales twice as high as those of its next largest global competitor, Yum! Brands, which ope-
percent, from US$72 billion in 2009 to more than price has almost tripled from US$76.76 on De-
rates the Taco Bell, KFC and Pizza Hut, among others.23 The burger giant’s golden arches are among
US$100 billion in 2019, as shown in Figure A.27 cember 31, 2010 to US$214.58 on December 31,
the most iconic brands in the world and are valued at US$126 billion.24 Its more than 38,000 restaurants
The global fast food giant generated annual net 2020.29 In fact, even though the company’s sales
generate massive profits worldwide, including in France. In fact, France is the company’s second largest
market in terms of systemwide sales, second only to the United States. McDonald’s France has gene- dropped during the pandemic, as it was forced to
rated nearly €3 billion in net income, or profits, over the past ten years alone. However, most of these close a quarter of its restaurants across the globe,
Figure A : the stock price hit an all-time high of US$229.64
profits are not reinvested in France but instead are siphoned off to McDonald’s Corporation LLC, its
American corporate parent. Further, the vast majority of McDonald’s workers in France do not receive McDonald's Corporation Global Systemwide on October 15, 2020, following significant reco-
Sales, 2009-2019 ($US billions) very in sales.30 The largest holders of the com-
profit-sharing payments as McDonald’s operators structure their French entities in a way that has the
effect of circumventing these legally-mandated employee payments.25 pany are US-based financial institutions. Of the
100 top ten holders – who together own just over
96
89 91 one-third of the common stock of the company
86 88 88 85
83
77 – all but one are US-based investment banks.31
72
McDonald’s In addition, over the past ten years, more
At A Glance26 than US$76 billion, or more than US$7 bil-
_ lion annually, on average, have been distri-
buted to shareholders in the form of share
US$100.2 BILLION buybacks and dividends.32 Even during the Co-
Global systemwide sales
ronavirus pandemic, the company has conti-
US$6.0 BILLION 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 nued to pay dividends to its shareholders.
Global profits
38,695
Global McDonald’s restaurant count
Figure B :
24,849
McDonald’s restaurants outside of US McDonald's Corporation Global Profits,
2009-2019 ($US billions)
119 Figure C :
Countries with McDonald’s locations
6 McDonald's Corporation Stock Price
5.9
(NYSE: MCD), Dec. 31, 2009-Dec. 31, 2019 ($US)
93% 5
5.5 5.5 5.6
5.2
Share of McDonald’s locations franchised 4.8 4.7 214.5
4.5 4.5 197.6
172 177.5
118 121.7
99 97 93.7
88.2
76.7
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/8 © ReAct 2021 © ReAct 2021 /9MCDONALD’S PRIORITIZES DIVIDENDS DURING PANDEMIC
The COVID-19 pandemic has severely impacted economic security in many of the countries in
McDonald’s operations globally. McDonald’s re- which it operates, including in the United States,
venue fell six percent in the first quarter of 202033 McDonald’s plans to continue these significant
as one-in-four McDonald’s restaurants globally payments to shareholders in 2021 and expects
were shuttered due to the spread of the virus, upcoming dividend payments for that year to
including nearly all the locations in France.34 amount to between US$3.5 and US$4.0 billion.38
Despite the precarious situation of McDonald’s In this unprecedented time, major global cor-
workers during the health crisis, McDonald’s exe- porations have cut or indefinitely suspended
cutives informed shareholders that it planned to their dividends such as General Motors, Ford,
proceed with its pre-pandemic plans for divi- Macy’s and Estee Lauder.39 In total, more US
dend payments. For the first three quarters of companies have either suspended or can-
2020, McDonald’s reported US$2.8 billion in di- celled dividends in 2020 than in the previous
vidend spending and the company has recently 10 years combined.40 In France, the govern-
announced a cash dividend of approximately ment has required companies asking for cer-
US$958.9 million for the fourth quarter35 Total tain forms of COVID-19-related state assistance
dividends paid in 2020 will sum to an all-time intended to help them weather the economic
historic high of approximately US$3.8 billion. impact of the crisis, to not pay dividends this
year.41 Almost one-third of French companies
In March 2020, CEO Chris Kempczinski stated listed on the Paris stock exchange cancelled
that the quarterly dividend is a “paramount prio- or suspended dividend payments in 2020.42
rity”36 and in the company’s May shareholder
meeting, Kempczinski asserted that one of the Further, while McDonald’s announced a halt
main goals of the company's capital allocation on share buybacks in March, the company did TOTAL DIVIDENDS PAID
program is “prioritizing dividends to our sharehol- distribute US$868.9 million in buybacks in Ja-
ders.”37 Despite critiques that McDonald’s has nuary and February 2020, as the coronavirus
IN 2020 WILL SUM TO AN
not done enough to protect workers’ health and took hold in China and spread to Europe.43 ALL-TIME HISTORIC HIGH
OF APPROXIMATELY
US$3.8 BILLION.
© iStockphoto.com / Sushiman
/ 10 © ReAct 2021 © ReAct 2021 / 11McDonald’s France, Over the same period, the number of restaurants Unlike most fast food chains, McDonald's does significantly outstrips both the growth in restau-
a significant profit driver in mainland France rose from 1,161 to 1,490, repre- not derive most of its revenue from the sale of rant openings (28 percent) and total systemwide
for the McDonald’s Corporation senting a 28 percent increase, with approximately fast food or the revenue generated by royalties sales (32 percent) for the same period, sug-
30 annual new restaurant openings, on average.46 from restaurant operators, but rather from the gests that McDonald’s France SAS has extrac-
France is McDonald's second largest market in
the world in terms of systemwide sales.44 Over rents it charges to its restaurant operators for lea- ted a larger share of revenues from restaurant
the past 10 years (from 2009 to 2019), total sys- sing the physical restaurants.47 Whether a McDo- operations as the period progressed. Indeed, if
temwide sales by McDonald's in France rose
France is McDonald's second nald’s restaurant is corporate-owned, franchised McDonald’s France SAS charged the same level
each year, from €4.18 billion to €5.50 billion, a 32 largest market in the world or operated as a 50/50 joint venture between of royalties and rent year after year, then McDo-
percent increase.45
in terms of systemwide sales. the corporation and another entity, the restau- nald’s France SAS’ revenue increase would be
rant operator enters into a “lease-management” the same as the increase in systemwide sales.
agreement with the corporation which combines
typical franchise obligations like standard pro- When examining McDonald’s France SAS’ re-
duct offerings and restaurant design, sourcing venue breakdown as detailed in Appendix 1,
TABLE 1: Increase in McDonald’s France systemwide sales and number of restaurants in mainland France, requirements among others elements, with those payments made by restaurant operators to the
2009-2019 (in billion Euros)
of a commercial lease. In France, the vast majority company increased by approximately 53 percent
McDonald’s France total systemwide sales of lease-management agreements are executed over the period, from €667 million in 2009 to
Year Total number of McDonald’s restaurants
(billions) by operators with McDonald's France SAS.48 Pur- €1.02 billion in 2019.52 The higher proportion of
suant to these lease-management agreements, revenue extracted by McDonald’s France SAS
2009 €4.18 1,161
McDonald's France SAS receives (1) a 5 percent may be explained by an increase in the percen-
2010 €4.22 NA royalty based on restaurants' sales for the use of tage of rent charged by McDonald's to restau-
the trademark and franchise know-how49 and (2) rant operators. Given that the royalty paid for
2011 €4.34 1,226 a payment up to 12 to 18 percent of restaurant the operation of the McDonald's system (trade-
2012 €4.35 1,260 sales as a rental payment.50 These payments re- mark and know-how) is intended to remain the
present most of McDonald's France SAS revenue. same year after year to conform to transfer pri-
2013 €4.42 1,298 cing regulations, McDonald's can essentially in-
McDonald's France SAS's annual accounts show crease its rental charges to boost its revenue.
2014 €4.57 1,345
a constant increase in revenue – mainly gene-
2015 €4.59 1,388 rated from the royalty and rents received from In addition, during the same time period that
franchisees – from €694 million in 2009 to €1.06 McDonald’s France SAS revenue increased by
2016 €4.70 1,419 billion in 2019. This revenue increase amounts to 53 percent, profits remained relatively stable
a rise of 53 percent over the ten-year period.51
2017 €4.90 1,442
© iStockphoto.com / Petekarici
2018 €5.10 1,464 The fact that McDonald's France SAS's revenue
increase of 53 percent over this 10-year period
2019 €5.50 1,490
Change
+32% +28%
(2009-2019)
Over the past 10 years,
total systemwide sales
by McDonald's in France
rose each year, from
€4.18 billion to €5.50 billion,
a 32 percent increase.
/ 12 © ReAct 2021 © ReAct 2021 / 13throughout the period, with the exception of years tem of France while holding substantial reserves TABLE 3: Average annual sales, net profit and net profit margin for McDonald’s restaurants
2016, 2017 and 2019, during which McDonald’s from past operations.55 Specifically, McDonald’s in mainland France, by ownership structure, 2011-2019 (in Euros)
France made substantial provisions for risks.53 In France distributed almost €3 billion in dividends
total, McDonald's France SAS declared almost to its US parent company over the past ten years. Average annual Average annual net Average net profit
Structure type
sales profit margin
€3 billion in profits over the 2009-2019 period.54
At the restaurant level, McDonald’s restaurants Franchised €3,445,565 €208,669 6.06%
McDonald’s France SAS profits are then either are also usually very profitable whether ope-
50/50 joint ventures €3,509,335 €202,004 5.76%
distributed as dividends to its sole shareholder, rated directly by McDonald’s (hereafter referred
McDonald's System of France, a subsidiary of to as "corporate-owned restaurants")56, through Total €3,781,196 €114,128 3.02%
McDonald's Corporation registered in Delaware, 50/50 joint ventures (hereafter referred to as
Corporate-owned
U.S.A., or allocated to "other reserves", an accoun- "joint venture restaurants")57 or through fran- €4,429,303 €-20,687 -0.47%
(100%)
ting category in which reserves can be held in an- chisees (hereafter referred to as "franchised Corporate-owned
Corporate-owned
ticipation of potential payments related to finan- restaurants”).58 Appendix 2 provides a simplified €3,270,716 €193,187 5.91%
(90%)
cial or operational risks or that can be distributed breakdown of these units. As of the end of 2019, Corporate-owned
€3,755,740 €342,222 9.11%
later as dividends to the same US entity, or allo- 14.5%, 15.5% and 70.0% of McDonald’s restau- (51%)
cated to “retained earnings”, an accounting cate- rants were operated as corporate restaurants, All restaurants combined €3,555,070 €187,736 5.28%
gory in which the amount of profits can be held 50/50 joint ventures and franchises, respectively.
until the shareholder takes a decision concerning
its allocation. As shown in table 2, over the past McDonald's does not provide information on of restaurants by ownership structure, infor- margin, on average, although they have much hi-
10 years, McDonald's France SAS has distributed the profits made by individual restaurants. mation on restaurant revenue and profits for gher sales than all other structure types. The finan-
all of its profits as dividends to McDonald's Sys- Hence, in order to measure the profitability three-quarters of McDonald’s French restau- cial situation portrayed on the financial statements
rants for the nine-year period 2011 to 2019 of McDonald’s 100 percent corporate-owned res-
was collected and analyzed from financial taurants raises legitimate concerns, since these
data published by infogreffe.fr. A detailed dis- restaurants are usually operated via McDonald’s
TABLE 2: McDonald’s France SAS, profit and its distribution, 2009-2019 (in million Euros)
cussion of this data is provided in Appendix 3. subsidiaries that exceed the 50-employee (FTE)
threshold that require mandatory payment of
Dividend Other reserves
Retained As shown in table 3, these data show that over the employee-profit sharing. The fact that these very
Year Profits distributed to US
Amount at year Change in other earnings nine-year period 2011-2019, McDonald's restau- entities – the ones under complete McDonald’s
Parent
end reserves
rants in France have generated more than €2.3 France’s control and the most likely to require em-
2009 €677 €10 €757 €0.590 billion in net profits, or in excess of €187,000 in an- ployee-profit sharing – are the only McDonald’s
2010 €247 €15 €1,425 +€668 €0.590
nual profits on average per restaurant, represen- entities in the country with almost consistently ne-
ting an average net annual margin of 5.3 percent. gative profits in their accounts, is puzzling at best.
2011 €255 €0 €1,656 +€231 €0.590
2012 €286 €0 €1,912 +€256 €0.590 Corporate-owned restaurants with 51 percent Workers have challenged what they consider
of the shares owned by McDonald’s France amounts to financial manipulation. Specifically,
2013 €266 €0 €2,197 +€285 €0.590
SAS are the most profitable among the struc- the works council of McDonald's Ouest Parisien
2014 €283 €1,200 €2,463 +€266 €0.590 ture types, with a 9.1% net profit margin, on ave-
rage, followed by franchised restaurants (6.1%),
2015 €275 €360 €1,547 -€916 0
90-percent corporate-owned restaurants (5.9%) McDonald's restaurants in
2016 €47 €360 €1,462 -€85 0 and 50/50 joint ventures (5.8%). These restau-
rant-level profits persist despite the high rents,
France have generated more
2017 €20 €250 €1,260 -€202 0
royalties and other fees charged by McDonald’s. than €187,000 in annual restau-
2018 €290 €0 €1,280 +€20 0
rant-level profits, on average,
On the contrary, many McDonald’s 100 percent
2019 €199 €750 €820 -€460 0
corporate-owned restaurants are unprofitable
between 2011 and 2019.
TOTAL €2,846 €2,945 +€63
over the 2011-2019 period with a -0.47% net profit
/ 14 © ReAct 2021 © ReAct 2021 / 15("FTE") employees.66 On the contrary, companies restaurants were operated through frag-
with fewer than 50 FTE employees do not have mented corporate entities companies in 2019.70
to comply with these obligations, but employers
can voluntarily decide to honor them. Each Mc- As the table shows, it is necessary to dis-
MCDONALD’S FRANCE Donald's restaurant employs approximately 50 tinguish the situation of franchised restau-
DISTRIBUTED ALMOST €3 BILLION employees on average,67 but usually less than rants and 50/50 joint ventures from the si-
50 FTE employees since most are part-time em- tuation of corporate-owned restaurants.
IN DIVIDENDS TO ITS US PARENT ployees.68 As shown in Table 13 later in this re-
COMPANY OVER THE PAST port, the average number of FTE workers per Mc- Companies operating franchised restaurants
TEN YEARS. Donald’s restaurant in 2019 is approximately 37. and restaurants in 50/50 joint ventures appear
to systematically register one company per
© Daria Photostock / Shutterstock.com
By design, McDonald’s French operators do not restaurant. That is, 98 percent of restaurants
operate through a single company, but rather with these two ownership structures – which
operate through fragmented corporate subsi- compose 85 percent of all McDonald’s restau-
diary entities, one entity per restaurant. Delibe- rants in France – are organized such that one
rately structured, these entities often fall below corporate entity contains a single restaurant.71
the 50 FTE employee threshold for mandated Hence, in these cases, this extreme level of
employee profit-sharing. That is, despite the fact fragmentation means that employees will not
that the total number of employees in all these automatically participate in profit-sharing be-
smaller McDonald’s entities work for the same cause each individual corporate entity usually
operator and ultimately for the restaurant giant. falls below 50 FTE employee requirement, des-
By legally structuring itself in this way, McDo- pite the fact that each of these restaurants have
filed a criminal complaint for tax fraud money in net earnings per year, on average, with 85 nald’s and its franchisees are able to avoid man- generated, on average, more than €200,000
laundering, arguing that the McDonald’s France percent of them receiving less than €20,000 per datory profit-sharing payments in most cases.69 in profits per year over the 2011-2019 period.
subsidiary that included the corporate-owned year as compared to 65 percent for workers in
restaurants in the west of Paris artificially re- the hotel and food service sector as a whole.62 An analysis of the number of companies re- As for the corporate-owned restaurants, most
duced profits to avoid profit-sharing payments. 59 In France, like abroad,63 McDonald's restau- gistered to operate McDonald's restaurants in are also organized in a similar way as the 98
This criminal complaint follows investigations by rants hire their crew members at or just above France shows that 94 percent of McDonald's percent of 50/50 joint venture and franchised
the European Commission and French tax au- the minimum wage and pay their front-line ma-
thorities concerning McDonald’s tax avoidance nagers just slightly higher wages.64 McDonald’s
has a specific responsibility as it employs 29 TABLE 4: Distribution of McDonald’s restaurants in mainland France, by ownership structure
practices. The European Commission indeed
and the proportion distributed across fragmented corporate entities, 2019
underlined that McDonald’s tax scheme with percent of the fast food workforce in France and
should ensure its jobs provide decent wages, Number of
Luxembourg allowed the McDonald’s company Ownership
Proportion of capital Number of
restaurants in
Percent of
collecting royalties from European operations job stability and safe working conditions.65 held by McDonald’s McDonald’s restaurants in single
structure unique corporate
France restaurants unit entities
not to pay any corporate tax which “is not how entities
In addition to low wages, most McDonald's res-
it should be from a tax fairness point of view.”60 100% 66 6 9.0%
taurants in France generally do not pay any
In France, McDonald’s and the French financial
profit-sharing to their employees, despite the Corporate-owned 90% 128 215 126 153 98.4% 71.2%
Prosecutor are reportedly bargaining a settle-
substantial profits these workers make pos-
ment on this case, including a potential fine.61
sible. The corporate structure of McDonald’s 51% 21 21 100%
restaurants results in depriving workers of
McDonald’s low wages 50/50
their legally-obligated profit-sharing payments. 50% 229 227 99.1%
and limited profit-sharing joint ventures
Fast food workers in France are among workers French law provides that the payment of pro- Franchises 0% 1,037 1,013 97.7%
with the lowest annual earnings in the French fit-sharing is mandatory when profits are made
TOTAL 1,481 1,393 94.1%
economy. Fast food workers receive €17,500 in companies with at least 50 full-time equivalent
/ 16 © ReAct 2021 © ReAct 2021 / 17units. Specifically, in 2019, 147 of the 149 corpo- Of these six entities, the majority has been pro-
rate restaurants in which McDonald’s has more fitable over the past five years but none paid
than a 50 percent and less than a 100 percent employee profit-sharing.74 The remaining 60 are
stake are organized into corporate entities that operated by subsidiaries operating several res-
have only one restaurant per entity.72 Here again, taurants. As a result, these subsidiaries employ
the registration of each of these restaurants – 69 more than 50 FTE employees and have set up
percent of all corporate-owned restaurants – into legally-mandated Works Councils and appointed
separate corporate entities makes it possible to trade union delegates. However, while McDo-
© Greg Looping / Hans Lucas via AFP
circumvent mandatory employee profit-sharing nald's restaurants in France made an average
payments on a huge scale. Some of these corpo- profit of nearly €188,000 per year over the 2011-
rate-owned restaurants pay employee profit-sha- 2019 period,75 these subsidiaries are often unpro-
ring – likely because they are among the few fitable or have accumulated significant losses in
ones that exceed the 50 FTE employee-threshold recent years. As table 3 above shows, McDo-
or because an economic and social unit was set nald’s 100 percent corporate-owned restaurants
up – but they are a distinct minority compared have made a €20,000 loss, on average per
to the number of profitable restaurants. In 2014, year, although they have generated much higher
the most recent year for which this analysis was sales than all of the other types of McDonald’s appropriate economic and social unit classifica- employees with French McDonald's employees
carried out, approximately 14 percent of profi- restaurants. As a result of being at or below zero tion for each restaurant is daunting. McDonald’s working at the French headquarters in Guyan-
table corporate restaurants in which McDonald’s profit on paper, these McDonald’s entities typi- high level of staff turnover and the number of le- court. McDonald's employees at the French
has more than a 50 percent and less than a cally did not distribute any profits to employees. gal actions that would need to be undertaken to headquarters receive a substantial profit-sha-
100 percent stake were paying employee pro- address the high level of fragmentation creates ring payment each year. As shown in Table 5,
fit-sharing. The remaining 86 percent did not To challenge the artificial division and fragmen- significant challenges to these collective claims.78 over a period of seven years, McDonald's France
pay any employee profit-sharing despite gene- tation of structures by an operator, employees Services paid nearly €6.1 million in profit-sha-
rating more than €25 million in profits and dis- or their trade union representatives must take Another way to examine the issue of the frag- ring to its employees, amounting to an annual
tributing more than €20 million in dividends.73 legal action and demonstrate the existence of mentation of McDonald’s restaurants is to look average payment of €1,602 per employee.82
an "economic and social unit" across the smal- at the profit-sharing outcomes at McDonald’s
The remaining 66 corporate restaurants are 100 ler units, a laborious and expensive set of le- most-profitable restaurants.79 Some of McDo- Given the low wages of McDonald’s wor-
percent owned by McDonald’s France. Six were gal actions.76 With close to 1,400 unique corpo- nald’s most-profitable restaurants exceed the 50 kers across the country, profit-sharing pay-
operated as unique corporate entities at the end rate entities operating McDonald’s restaurants FTE employee-threshold and are thus required ments of a similar magnitude would have subs-
of 2019 although they share a common owner. in France,77 filing legal claims to recognize the to pay employee profit-sharing provided that tantial impact on these low-wage workers.
other legal requirements are fulfilled.80 Howe-
ver, among the 25 most-profitable McDonald’s In May 2019, French Law n° 2019-486, known as
restaurants that disclosed their annual accounts the “PACTE Law” included provisions modifying
between the years 2015 and 2019, at most six the profit-sharing system. However, the PACTE
and as few of two restaurants, depending on the Law did not address the issue of profit-sharing
year, made employee profit-sharing payments. avoidance based on the fragmentation of opera-
tions. In addition, the law also tightened the requi-
Overall, only 15 percent of McDonald’s restau- rements under which mandatory employee-profit
rants in France paid employee profit-sharing in sharing must be done, making it more difficult for
© iStockphoto.com / Natalia Kuzina
2015, and employees’ lost earnings resulting from employees to qualify for these payments. For exa-
the circumvention of the employee profit-sharing mple, the law increased the period during which
was estimated to be €40 million euros per year.81 the 50 FTE employee-threshold is required be-
fore mandating the payment of employee pro-
To understand the impact of these profit-sharing fit-sharing from three to five successive years.83
payments, it is illustrative to compare the finan-
cial situation of French McDonald’s restaurant In June 2020, members of President Macron’s
/ 18 © ReAct 2021 © ReAct 2021 / 19TABLE 5: Average profit-sharing payments distributed to employees of McDonald’s France Services, ting from state support shall share value created der additional burdens should not be placed on
2013-2018 (in Euros) with employees when they become profitable companies impacted by the economic crisis, Mc-
again.”85 Recently, as part of the debate around Donald’s exemplifies the pressing need to revise
Average profit-sharing paid to the stimulus plan, members of the French Parlia- taxpayer-funded corporate subsidy programs, par-
Year Employee profit-sharing Average number of workers
each employee
ment have discussed potential actions that should ticularly for largely-profitable multinationals, and
2013 €1,034,029 560 €1,847 be required from corporations in return for state to address their profit-sharing avoidance based
support.86 While some argue that what they consi- on the fragmentation of franchise operations.
2014 €1,009,163 586 €1,722
2015 €948,237 554 €1,712
2016 €881,198 551 €1,599
2017 €598,901 539 €1,111
2018 €838,596 516 €1,625
Among the 25 most-profitable McDonald’s restaurants
2019 €790,416 505 €1,565
that disclosed their annual accounts between the years 2015
TOTAL €6,100,540 3,811 €11,181
and 2019, at most six and as few of two restaurants,
AVERAGE €871,505 544 €1,602
depending on the year, made employee profit-sharing payments.
party in the French Parliament announced a draft
Bill to extend mandatory employee-profit sharing
to companies with less than 50 FTE employees, a
© 8th.creator / Shutterstock.com
change that could finally have the effect of requi-
ring McDonald’s operators to share a portion of
their profits. At the time of this writing, this legis-
lation had not been officially filed.84 In September
2020, Bruno Le Maire – the French Minister in
charge of Economy, Finance and the Stimulus
Plan – said he was in favor of commitments made
by companies to share value through charters in
return for state-support programs. He underlined
that “it seems fair to him that companies benefi-
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MCDONALD'S RELIANCE ON PUBLIC to McDonald’s over a six-month period for hires the Conversion of the Tax Credit
EMPLOYMENT-SUPPORT MECHANISMS for Competitiveness and
company would have made anyway to compensate
for its high staff turnover rate. Moreover, the French Employment into a reduction
TO INCREASE PROFITS government’s proposal to halve the Contribution
on Added Value made by Businesses [Cotisation
in social contributions: An even
more profitable mechanism
sur la Valeur Ajoutée des Entreprises] would gene- for McDonald’s
rate €11 million in savings per year for McDonald’s.
Adopted in 2013, the "Crédit d’Impôt Compétiti-
Thanks to these various support programs, Mc- vité et Emploi" (CICE) [Tax Credit for Competitive-
Donald’s has taken advantage of the reduction ness and Employment] has allowed companies
Despite the McDonald’s hefty profits and de facto circumvention of legally-mandated employee profit
of the costs of its workforce to increase profits, that pay low wages to significantly reduce their
sharing payments, the global burger giant, its French subsidiary and restaurant operators benefit from
rather than improve pay or working conditions. tax bills. Until recently, the tax credit was calcu-
taxpayer-funded programs intended to boost employment, particularly of low-skilled workers. These
The McDonald’s case thus provides a power- lated as a percentage – between four and se-
programs have been put in place by successive French governments and range from corporate tax
credits and reductions in employers’ mandated social contributions to state-aided contracts. ful example of the need for enforceable requi- ven percent, depending on the year – of wages
rements in return for state-support programs in- paid during the calendar year to employees re-
cluded in the stimulus plan so as to reduce the ceiving less than 2.5 times the French regulated
inefficiencies that result from these measures.88 minimum wage.89 The stated purpose of this tax
While these tax breaks and other corporate sup- reasons but a modified version of the program is
port programs intend to reduce unemployment and on the government’s agenda. If the modified pro-
support the skill-building of often-young workers, gram is designed in the same way as the initial
these programs do not appear to have any signi- one, it will likely benefit McDonald’s restaurants
ficant effect on McDonald’s employees or wages. through further reductions in employers’ mandated
These programs, however, appear to have had a social contributions, despite significant staff tur-
significant positive impact on McDonald’s ope- nover and a high rate of employee resignations.
rators profits in the past years, thereby indirectly
enabling McDonald’s France to extract more pro- Most recently, McDonald’s has benefited from the
fits from restaurant operators. As previously dis- French government’s exceptional measures to
cussed, these profits are not re-invested in France, support companies and workers during the CO-
but rather distributed to the US corporate parent. VID-19 pandemic. While the lockdown certainly im-
pacted revenue, the impact was mitigated by the
In addition, the French government had initially set company’s significant operational advantages that
up a new program that was to be implemented in allowed it to continue to generate sales thru drive-
2021 – the bonus-malus unemployment insurance thru, delivery and “click and collect” ordering. Given
system – that aimed to modulate the required em- McDonald’s size and dominance as well as these
ployer contributions for this critical safety net pro- significant operational advantages, McDonald’s res-
gram. This program was cancelled in November taurants are likely in a far better position than small
2020 by the Conseil d’Etat [French Supreme independent restaurants, thereby further advan-
Court for administrative matters] for procedural cing the burger giant’s competitive advantage. In
November 2020, McDonald’s CFO stated that the
© iStockphoto.com / cnicbc
company is "well-positioned to win and grow mar-
ket share in the QSR industry across [its] top mar-
kets."87 Above all, McDonald’s will likely largely be-
nefit from the French government’s stimulus plan.
For instance, the Youth Plan set up in July 2020
may have yielded €45 million in public subsidies
/ 22 © ReAct 2021 © ReAct 2021 / 23credit was to enable companies to benefit from wages paid in the previous year to a reduction TABLE 6: McDonald’s estimated tax savings via the Tax Credit for Competitiveness and Employment,
"funds to improve their competitiveness, in par- in the amount of current year employer social 2013-2018 (in Euros)99
ticular through efforts in investment, research, contributions, including mandated employee
Estimated tax savings for
innovation, training, recruitment, new market provisions for health care, disability insurance, McDonald’s restaurants at Average estimated tax
Year all McDonald’s restaurants
year end savings per restaurant
exploration, ecological and energy transition unemployment insurance, and retirement. The (millions)
and the restoration of their working capital".90 redesigned program does not, however, address 2013 €31 - €52 1,298 €24,052 - €39,696
the underlying criticism that the CICE’s corpo-
2014 €48 - €59 1,345 €35,673 - €43,972
Since its adoption, the CICE has been criticized rate benefits are unconnected from demons-
for the lack of concrete commitments required trable increases in high-quality job growth.95 2015 €48 - €67 1,384 €34,899 - €48,196
from the French government of companies
2016 €49 - €74 1,419 €34,778 - €52,088
that benefit from the program. Critics claim that Under the tax credit mechanism’s initial formu-
the tax credit has enabled many companies to lation, employee wages that did not exceed 2.5 2017 €60 - €77 1,442 €41,623 - €53,349
reduce their corporate taxes without actually times the minimum wage (€3,746.18 per month in 2018 €54 - €71 1,464 €36,578 - €48,284
creating high-quality, new jobs in the country.91 2018)96 were used to calculate this tax credit. Given
In August 2018, a report from Sciences Po’s La- McDonald’s low wages, the company benefitted Total €290 - €399 NA €207,603 - €285,585
boratoire Interdisciplinaire d’Évaluation des Po- greatly from this tax credit since virtually all Mc-
litiques Publiques (LIEPP) [Interdisciplinary La- Donald’s restaurant staff – front-line workers and
boratory for the Assessment of Public Policies] managers across the country – met this criterion.97
found no impact of the CICE on companies’
decisions to hire and no significant impact on In the absence of consolidated data disclosed
wage increases except for those in executive by McDonald's France on the exact amount of its
occupations, other white collar occupations CICE corporate subsidies, a sample of financial
(“professions intellectuelles supérieures”) and statements from McDonald’s restaurants was used
intermediate occupations (“professions inter- to estimate the amount of subsidy for the 2013-
médiaires”) over the 2013-2015 period; there 2018 period and a statement from McDonald’s
was no impact on wages in low-wage occu- France’s CEO for year 2013 was used to make an
pations.92 In October 2018, the Committee in alternative estimate for the same period. The de-
charge of reviewing the CICE – a committee tailed methodology for calculation is described
under the supervision of the Prime Minister – in Appendix 4. As shown in Table 6, McDonald’s
also found a very limited overall effect on em- restaurants saved an estimated €290 to €400
ployment.93 The most recent assessment publi- million over the 2013-2018 period, an average of
shed by France Stratégie in September 2020 €208,000 to €286,000 per restaurant. McDo-
has reached the same conclusion.94 Despite nald’s France Services SARL – McDonald’s subsi-
the criticism, the scheme was renewed year af- diary providing franchising support to restaurants
ter year until it was redesigned in January 2019 – benefited from a total tax credit amounting to ap-
and transformed from a tax credit based on proximately €2.2 million over the same period.98
© Pavlovska Yevheniia / Shutterstock.com
MCDONALD’S RESTAURANTS SAVED
AN ESTIMATED €290 TO €400 MILLION
OVER THE 2013-2018 PERIOD VIA
THE TAX CREDIT FOR COMPETITIVENESS
AND EMPLOYMENT.
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