Due to actions by President Barack Obama, “the Burger King national headquarters announced this month that they will be pulling their franchises from our military bases.”
Chain email circulating on the Internet
A reader recently forwarded us an email that bore some bad news for military families. “The Burger King national headquarters,” the email said, “announced this month that they will be pulling their franchises from our military bases.”
The email continued, “Soon to follow will be Popeye’s chicken, pizza franchises and the chain of barber and beauty shops which operates inside the gates of our military facilities. Reason? Obama’s mandate that all companies who do business with the federal Government pay a $10.10 per hour minimum wage. … Alas, as with all things Obama, every time he does something to please his socialist friends, someone suffers. In this case it will be our military.”
When we looked into it, we found that the email was referencing a real issue. But its most eye-catching claim — that Burger King had announced it will be pulling its outlets from military bases — was flat wrong.
Let’s start with some background.
The concerns raised in the email, which had been publicized by Republican lawmakers this spring, stem from two actions taken by the Obama administration that could affect how fast-food workers are compensated on some military bases.
The first change is a 2013 determination by the Labor Department — subsequently put on hold — that fast-food workers under federal contracts were due a $3.81-an-hour bump in compensation.
The second is a February executive order by President Barack Obama that mandated a $10.10 minimum wage for workers on federal contracts. Obama issued the order — which doesn’t require congressional approval — as a partial step after seeing his proposal for a $10.10 national minimum wage blocked in Congress.
For technical reasons, fast-food workers on Army and Air Force bases are not affected.
But outlets on Navy and Marine bases do operate by contract, and employers stand to be hit with significant pay increases for their lowest-paid workers (or put another way, workers stand to get a raise). The prospect that fast-food outlets could look at rising employee costs and choose to shutter their stores moved Russell Beland, deputy assistant secretary of the Navy for military manpower and personnel, to officially request a waiver of the compensation bump from the Labor Department.
In addition, 40 Republican lawmakers wrote a letter in April warning Labor Secretary Tom Perez of the potential fallout.
The lawmakers wrote, “Should these policy changes be fully implemented, we are concerned they will eliminate jobs, negatively impact recreational services on military bases, and limit the dining options for servicemen and women on military installations. … In addition, we understand that restaurants facing these additional labor costs have already determined that it would be cost prohibitive to offer military personnel these dining options and some may consider not renewing contracts and operations shutting down.”
A big part of the problem is that fast-food companies face a Catch-22. On the one hand, they would be forced to raise wages above what surrounding fast-food outlets pay. On the other hand, by law, they could not raise their prices above what those same surrounding fast-food outlets charge. So, unable to pass along the higher labor costs to customers, fast-food outlets would find their profits squeezed.
The department appears to be listening. According to Military Times, the Labor Department is “re-evaluating” wage determinations for fast-food workers and expects to “reissue industry-specific fast food wage determinations in the near future.” (That would ease but not eliminate the problem — it doesn’t appear that Obama’s $10.10 wage would be lifted under such an action.)
How bad could the fallout be? Beland wrote that, without relief on the compensation increases, “up to 390 fast food concession operations would close on installations across the U.S. and its territories, with a loss of nearly 5,750 jobs, many held by military family members and veterans.”
This is a worst-case scenario. So far, the impact appears to be far more limited. Military Times reported that, according to the Pentagon, McDonald’s locations closed on three Navy bases in March, and Marine Corps officials said that another on a Marine base was slated to close. Another eatery, I Love Country, closed at Naval Station Pearl Harbor, Hawaii.
That said, it’s not clear whether even these more limited closures were the direct result of the compensation increases (which hadn’t yet taken effect), or, for that matter, whether this rate of turnover is significantly higher than ordinary rates of closure on bases.
So what about the claim about Burger King picking up stakes? This part of the chain email is simply wrong.
“No Burger King restaurants on military bases are being closed as part of a planned process or program,” the company said in a statement to PolitiFact.
Our ruling
The email said that due to actions by Obama, “the Burger King national headquarters announced this month that they will be pulling their franchises from our military bases.” There is a legitimate question about whether compensation changes made by the administration could squeeze the profits of fast-food restaurants on Navy and Marine bases to the point where they feel the need to shutter their outlets.
But the impact of such changes is speculative, and as far as the specific claim about Burger King, it’s pure fiction that the company announced a sweeping departure from military bases. We rate the claim False.
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