Chipotle Mexican Grill, Inc. (CMG), Yum! Brands, Inc. (YUM), McDonald’s Corporation (MCD): Could Obama’s Latest Push Send It Tumbling?

A look in the crystal ball
What all this boils down to is the fact that restaurants, particularly fast-food joints, are already feeling the pinch thanks to increased supply chain cost and weaker consumer spending. Also, they employ a large portion of workers at minimum wage. Furthermore, most of the people working at these places are high school and college age, and probably not looking for a career in fast food. This likely leads to a higher turnover rate.

Consequently, if the Fair Minimum Wage Act is passed, there’s a good chance companies like McDonald’s Corporation (NYSE:MCD), Chipotle Mexican Grill, Inc. (NYSE:CMG), Taco Bell, and Starbucks Corporation (NASDAQ:SBUX) will be forced to raise prices, which will likely impact consumer spending. For investors, that’ll mean a loss in profits, leading to a negative impact on stock prices.

Time to toss the wrapper?
Right now, the Fair Minimum Wage Act could go either way, but I imagine — or at least hope — that representatives are considering all the factors. Yes, living on $7.25 an hour probably makes it hard to make ends meet, but at the same time, most of the workers in this situation aren’t facing the full expenses of “adulthood.” In addition, employers in fast-food chains are probably weighing a variety of factors, and not simply being greedy. Therefore, if employers are forced to raise minimum wage for everyone, I imagine it’ll prove costly to their bottom line. In turn, that’ll probably negatively impact the stock price. As such, investors would do well to continue monitoring the progress of the Fair Minimum Wage Act. If it looks like it will pass, it might be a good idea to reevaluate your holdings.

The article Could Obama’s Latest Push Send McDonald’s Stock Tumbling? originally appeared on Fool.com and is written by Katie Spence.

Fool contributor Katie Spence has no position in any stocks mentioned. Follow her on Twitter @TMFKSpence. The Motley Fool recommends and owns shares of Chipotle Mexican Grill, McDonald’s, and Starbucks.

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