Withdrawing from Association Supporting 'Tip Wage System'
Some See It as a Strategy to Advance Corporate Interests
McDonald's has taken a stand against the long-standing 'tip wage system' in the U.S. food service industry, arguing that all workers should receive at least the minimum wage.
The tip wage system is a practice where tips from customers supplement insufficient wages. According to reports from The Wall Street Journal (WSJ) and the New York Post on September 4 (local time), McDonald's has withdrawn from the National Restaurant Association (NRA), which supports this system, causing a significant stir in the industry.
McDonald's has opposed the long-standing practice of the 'tip wage system' in the U.S. food service industry, arguing that all workers should receive at least the minimum wage. Photo by Yonhap News Agency
Chris Kempczinski, CEO of McDonald's, emphasized in a recent interview with CNBC, "The current competitive environment is unequal," and stated, "A fair system would be to abolish the tip wage system." This reflects McDonald's analysis of its position, having lost ground in competition with full-service restaurants that reduce labor costs and secure price competitiveness through the tip system.
In fact, McDonald's U.S. same-store sales in the first quarter of 2025 saw the steepest decline since the pandemic. Meanwhile, competitors such as Chick-fil-A and Raising Cane's, which utilize the tip system, are continuing aggressive expansion. McDonald's believes that if all food service companies are required to pay at least the minimum wage, it will not be at a cost disadvantage compared to competitors that rely on tips.
'Tip Fatigue' Spreads... Leading to Changes in the System
McDonald's recent move is also closely related to the growing phenomenon of 'tip fatigue' across American society. Recently, as even counter-service stores and coffee shops have begun requesting tips through digital displays, consumer backlash has intensified. This has led to an actual decline in tips, undermining the rationale of the tip wage system, which supplements sub-minimum wages with tips.
In response to these changes, some states, including Chicago where McDonald's headquarters is located, are gradually abolishing the tip wage system. Last year, California raised the minimum wage for fast food workers to $20 per hour, and a total of six states have already implemented similar measures.
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