Business

Target said it has struck a long-term deal with Kendra Scott to carry exclusive collections of earrings, necklaces and more.
The jewelry will debut online and at about 150 stores as Target gears up for the holidays.
The cheap chic retailer has struggled with slower sales and public backlash in recent months.

Shoppers will soon see jewelry designed by Kendra Scott at about 150 Target stores. Most of the items will be under $40.

Target said Tuesday that it has struck a deal with jeweler Kendra Scott to carry exclusive collections of earrings, bracelets and more, as it looks to get its sparkle back ahead of the key holiday season.
The cheap chic retailer has established a reputation for launching its own brands and dedicating parts of its stores to merchandise from well-recognized national names, such as Levi Strauss, Disney and Apple. It has mini Ulta Beauty shops inside of a growing number of its stores, too.

With the new deal, colorful jewelry designed by Kendra Scott for Target will be available online and at about 150 stores. The first collection of more than 200 items, which range between $15 and $60, will hit on Oct. 22, just as customers are putting holiday shopping lists together and snagging early gifts. Most items cost less than $40, Target said.
The big-box retailer declined to share the deal’s financial terms but described it as “a long-term strategic partnership.”

The first Kendra Scott collection will hit Target’s shelves in late October.

The past year and a half has brought a sharp dose of reality for Target, which thrived and gained market share during the Covid-19 pandemic. The retailer dealt with the fallout of having the wrong merchandise last year as shoppers went out and about again.
In more recent quarters, Target shoppers have pulled back on buying clothing, home decor and other discretionary items while they spend more on experiences and pay higher grocery bills because of inflation. The company also faced public backlash over its Pride merchandise collection, which dinged sales in its most recent quarter. It has also pointed to organized retail theft as a challenge weighing on profits.
Target cut its forecast in August. It said it now expects comparable sales to drop around mid single digits, and earnings per share to range between $7 and $8 for the full fiscal year.

Shares of Target have fallen nearly 18% this year, far behind the 17% gains of the S&P 500. The company’s stock hit a 52-week low in late August.
On a call with reporters last month, CEO Brian Cornell said Target expects consumers to feel pressured in the coming months because of the return of student loan payments, rising interest rates and the still higher cost of necessities.
Yet, Target has had luck getting shoppers to add some discretionary items to their baskets, such as makeup and other beauty items.
Sales at its mini Ulta shops in the fiscal second quarter more than doubled, and sales of other beauty items posted double-digit gains compared to a year ago, Target’s Chief Growth Officer Christina Hennington said last month.
That’s a formula Target wants to replicate in other categories such as jewelry. More

Many on Wall Street see potential strikes by the UAW against the Detroit automakers as largely manageable, even investment opportunities.
Some believe potential strikes are already factored into the stocks, while others estimate the Detroit automakers can handle such work stoppages and expected labor cost increases.
The Detroit automakers and UAW have until 11:59 p.m. ET Thursday to separately negotiate new contracts for roughly 146,000 union members before potential strikes.

United Auto Workers members on strike picket outside General Motors’ Detroit-Hamtramck Assembly plant in Detroit, Sept. 25, 2019.
Michael Wayland / CNBC

DETROIT – Many on Wall Street view potential strikes by United Auto Workers against the Detroit automakers as largely manageable – even seeing investment opportunities.
Some believe potential strikes are already factored into the stocks, while others estimate General Motors, Ford Motor and Stellantis, collectively known as the Detroit automakers, or D-3, can handle such work stoppages and expected labor cost increases. The companies and the union are bargaining contracts for 146,000 union members ahead of an 11:59 p.m. ET Thursday deadline.

“Our theoretical math suggests that labor cost increases should largely be manageable for the D-3. Further, a work stoppage should keep inventories low and support prices staying elevated, which should be a near term offset for higher wages,” RBC Capital Markets analyst Tom Narayan said Thursday in an investor note.
Using Ford, which has the most UAW employees at 57,000, as an example, RBC estimated margin impacts for 10% and 20% raises for union workers would be 0.39% and 0.79%, respectively. That doesn’t factor in potential bonuses and other possible changes such as cost-of-living-adjustments, which the union has made a priority.

What “matters most” is the duration of a potential strike, Jefferies analyst Philippe Houchois said. In an investor note Monday, he estimates each week of a strike could account for 4% to 5% of adjusted earnings at Ford; 3% to 4% at GM; and 1.5% to 2% at Stellantis.
Simultaneous national strikes against the Detroit automakers, which the UAW has alluded to doing, would be unprecedented. It could have a ripple effect on the automotive supply chain, U.S. economy and domestic manufacturing. It also would likely tally into billions in losses for the companies in production, sales and other earnings.
A strike against GM in 2019 during the last round of contract negotiations lasted 40 days and cost the automaker $3.6 billion in earnings that year, the company reported at the time.

Morgan Stanley analyst Adam Jonas has continued to say the firm is largely a buyer “across much of our sector leading up to and during contract negotiations.” He estimates labor costs only account for around 4% of the global revenues for the Detroit automakers.
“Bottom line, we’d be a buyer of both F and GM right now and during the negotiations as we believe even a ‘difficult’ outcome can catalyze far bigger changes to strategy and capital discipline that will eventually yield significant and longer lasting benefits to shareholders that will exceed today’s labor headlines,” Jonas said in an Aug. 28 note.

Jonas also said Monday that a strike may be positive for used car prices and relatively good for dealers and rental car companies such as Avis Budget Group and Hertz.
A UAW strike could “drive some headline-related downwards movement to the stocks, but the stocks largely reflect the risks of a material strike,” BofA Securities analyst John Murphy said Friday.
The union’s demands also could be costly if tentative deals are reached. Key demands have included a 40% hourly pay increase, a reduced 32-hour work week, a shift back to traditional pensions, elimination of compensation tiers and restoration of cost-of-living adjustments, among other items on the table.
– CNBC’s Michael Bloom contributed to this report. More

A Lazard investment banker sounded the alarm about the dominance of Elon Musk’s SpaceX in the rocket launch market.
“Having such a dominant launch provider is probably not healthy just in general for the commercial prospects of the industry. No one wants a monopoly choking out one point of the value chain,” Vikram Nidamaluri, a managing director at Lazard, said at the World Satellite Business Week conference on Monday.
Several other U.S. companies are working to launch competitors to SpaceX’s workhorse Falcon rockets, but delays mean American rivals are struggling to field next-generation operational rockets.

Vikram Nidamaluri, Managing Director of Telecom, Media, and Entertainment at Lazard, speaks during a panel at the World Satellite Business Week conference on Sept. 11, 2023.
Michael Sheetz | CNBC

PARIS – A Lazard investment banker sounded the alarm about the dominance of Elon Musk’s SpaceX in the rocket launch market, as the industry waits for U.S. competitors to begin flying new vehicles.
“I think it’s a huge concern,” Vikram Nidamaluri, managing director of telecom, media, and entertainment at Lazard, said during a panel at the World Satellite Business Week conference on Monday.

“Having such a dominant launch provider is probably not healthy just in general for the commercial prospects of the industry,” Nidamaluri added. “No one wants a monopoly choking out one point of the value chain. There are obviously other players that are ramping up capacity but I think the timeline hasn’t moved forward rapidly enough.”
Nidamaluri echoed concerns about a rocket launch monopoly raised by others in the space industry this year. Rocket launches are a potential bottleneck in the process of flying valuable satellites, spacecraft, and astronauts in orbit. Several other U.S. companies are working to launch competitors to SpaceX’s workhorse Falcon rockets, but delays mean American rivals are struggling to field next-generation operational rockets.

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A few days ago, SpaceX launched its 63rd mission of 2023 – and the company has already topped last year’s record of 61 missions while flying at a blistering average of a launch every four days. Beyond the U.S. rocket market, SpaceX leads the world in both launches and spacecraft mass delivered to orbit each quarter. The company alone keeps the U.S. ahead of China, the next closest geopolitical competitor, in satellite and astronaut launches.

A Falcon 9 rocket launches a Starlink mission on January 31, 2023 from Vandenberg Space Force Base in California.

SpaceX Vice President Tom Ochinero, during a separate panel at World Satellite Business Week on Monday, responded to Nidamaluri’s concern by framing it around whether the rocket-builder would fly satellites of competitors to its Starlink satellite internet service.
“We’ve proven that, yeah, we will,” Ochinero said. “We’re a launch company first, we’re here to provide launches.”

While Starlink is clearly SpaceX’s “big internal customer,” Ochinero noted that the company has moved launches for its own satellites “out of the way as needed sometimes to provide launches for competitors and customers” alike. SpaceX recently signed a deal to launch 14 missions for Canadian operator Telesat to deliver its Lightspeed internet satellites to orbit, and has previously launched satellites for other Starlink communications competitors such as OneWeb, Viasat, and EchoStar.
“I’m not super worried about this – we’re here to launch,” Ochinero said
Tory Bruno, CEO of United Launch Alliance, during the same panel pushed back on the idea that SpaceX has full control of the launch market. ULA, historically the next largest U.S. rocket competitor, has completed only two launches so far in 2023, and is working toward the inaugural launch of its next-generation Vulcan rocket in the coming months.
“I appreciate the sentiment that [SpaceX] will be a benevolent monopoly, I don’t think you’re a monopoly and I don’t think it’s our plan for you to become one,” Bruno said. More

Macy’s has tapped Olivier Bron, a French national and international retail executive, as its next CEO.
With the move, the legacy retailer is adding an outside perspective and a dash of global flair to its upscale department store.
Bron is succeeding Tony Spring, who is becoming the CEO of parent company Macy’s.

Shoppers walk past a Bloomingdale’s store in the SoHo neighborhood of New York, US, on Wednesday, Dec. 28, 2022.
Victor J. Blue | Bloomberg | Getty Images

Macy’s said Tuesday that it has tapped international retail executive Olivier Bron as the next CEO of its upscale department store, Bloomingdale’s.
Bron will succeed Tony Spring. A 36-year veteran of Bloomingdale’s, Spring became CEO-elect of the parent company Macy’s in March. He will succeed longtime leader Jeff Gennette, who is retiring in February.

Bron will step into his new role in early November.
With the move, the legacy retailer is adding an outside perspective and a dash of global flair to the higher-end department store. Bron, 46, is a French national who was most recently CEO of Central and Robinson department stores in Thailand.
Prior to that, he was chief operating officer and director of strategy for Galeries Lafayette, a French retail group in Paris. He also spent more than a decade at Bain & Company as a retail consultant.

Olivier Bron
Bloomingdale’s

By tapping a retail executive who is from another company and country, Macy’s may be hinting at bigger global ambitions for Bloomingdale’s. The chain has a small international presence, with locations in Dubai and Kuwait. Yet Bloomingdale’s flagship store in midtown Manhattan signals its popularity with tourists who flock to New York City. The store’s exterior is decorated with flags from around the world.
Macy’s also has described Bloomingdale’s as “a cornerstone” of one its key strategies — growing its luxury business.

In a news release, Spring described Bron as “an authentic and charismatic leader” who understands Bloomingdale’s brand and is ready to take the company into the future.
“His extensive international retail career and deep knowledge of the luxury market will be invaluable as we pursue additional opportunities for growth,” Spring said.
Bron said in the news release that he’s long admired Bloomingdale’s brand. He said he wants to build on that with “new store formats and continued digital expansion.”
It will mark the first time since 1991 that Macy’s has hired an outside executive as Bloomingdale’s CEO. Spring, who took the helm at the chain in 2014, succeeded Michael Gould, who came from fragrance brand Giorgio Beverly Hills in 1991 after serving as its CEO.
Along with operating 34 stores across the country, Bloomingdale’s has recently experimented by opening smaller stores called Bloomie’s. It has two locations and plans to open another in Seattle, a new market for Bloomingdale’s and the backyard of rival Nordstrom.
Bloomingdale’s also has 20 outlet stores across the U.S.
For Macy’s, Bloomingdale’s has been a growth driver and steadier source of business as some of the company’s legacy department stores have shuttered or struggled. Bloomingdale’s touts designer names and pricier items and tends to draw a more affluent customer.
In the most recent quarter, however, even Bloomingdale’s sales sagged amid greater pressure on consumers’ budgets and a shift toward spending on experiences. Comparable sales declined 2.6% on an owned-plus-licensed basis as customers bought fewer handbags, men’s apparel items and dresses.
Along with its namesake stores, Macy’s includes beauty chain Bluemercury, which saw sales gains in the most recently reported quarter.
Macy’s namesake stores, however, remain the biggest part of the business. The parent company does not split out revenue by store brands, but Macy’s stores make up most of its footprint and draw most of its shoppers.
As of late July, Bloomingdale’s had 4 million active customers on a trailing 12-month basis, compared with 41.5 million active customers at Macy’s and about 736,000 at Bluemercury. More

UPS CEO Carol Tome said the new labor deal with the Teamsters will cost less than the $30 billion outlined by the union.
The company aims to sell the agreement to investors, as its stock has fallen since a tentative deal was announced.
A Teamsters strike would have been the “costliest in a century,” creating a $7 billion hit to the U.S. economy in the first 10 days, according to one report.

UPS CEO Carol Tome introduces U.S. President Donald Trump for an event at a UPS facility at Hartsfield-Jackson Atlanta International Airport in Atlanta, Georgia, U.S., July 15, 2020. 
Jonathan Ernst | Reuters

UPS CEO Carol Tome said the costs incurred by the company for the new Teamsters contract are less than the “$30 billion in new money” touted by the union, as the company aims to sell investors on the agreement.
“It’s not a $30 billion deal,” Tome told CNBC’s Frank Holland in an exclusive interview on Monday. But Tome declined to reveal the internal projection as the company released its first presentation to investors outlining the labor expenses after the bell Monday.

UPS said 46% of the compensation in the deal would be in the first year. Tome called the agreement cost-effective and fair.
“It’s a barbell structure where it’s heavier in the beginning of the contract.” Tome said. “We’ll go in the middle of the contract and it steps back down. This 46% of the cost increase happens in the first year, so imagine what the last four years of the contract are!”
The increases “are really good for us and a 3.3% compounded annual growth rate,” she added. “That’s a deal we’ll take every day, but it wasn’t just about the money. We’ve got work/life balance for people, while retaining the ability to deliver on the weekend, which is really important for our customers.”

Averting a crisis

The labor contract reached in July prevented a potentially widespread and disruptive work stoppage. A Teamsters strike would have been the “costliest in a century,” creating a $7 billion hit to the U.S. economy in the first 10 days, according to a widely reported estimate from Anderson Economic Group.
It also was another milestone in a summer marked by pushes for massive new contracts — and even strikes —‎ in industries ranging from airlines and automaking to television and film. At UPS, full-time drivers will earn up to $170,000 in pay and benefits in the last year of the contract, while part-time workers will see their starting pay rise from $16.20 to $21 an hour.‏

Official negotiations between UPS and the Teamsters began in April, as union leaders urged members to mobilize and create a “show of force it needs to take on the company.” In June, Teamsters members authorized a UPS strike during the negotiations. Weeks later, both sides accused the other of walking away from the contract talks.
In late July, UPS and the Teamsters announced they had reached a tentative contract agreement. The union ratified the UPS contract on Aug. 25 with record turnout of 58% of members voting and a record 86% approving the deal.

A ‘win-win-win’

After the tentative deal for the Teamsters contract was reached, Tome called it a “win-win-win” for the union, customers and the company.
However, UPS shares have fallen more than 14% since the July 25 announcement. Tome also estimated that UPS lost more than 1 million packages per day in volume in the weeks leading up to the eventual deal.
“We can grow now that we have certainty,” Tome said. “Because we know what our labor costs are over the next five years, we can put together plans to mitigate that cost, plans to drive productivity inside of our business through automation, which, oh by the way, we retained the ability to do so.”
Tome said the win for customers, as the holiday-shipping peak approaches, is the most important part of the deal. U.S. holiday e-commerce sales are expected to increase by 1% year over year to $273 billion, according to a recent forecast from Salesforce.

UPS shifts to modernization strategy

Tome said the Teamsters negotiation was another test of her leadership, rivaling the challenge of becoming CEO of UPS in June 2020 at the height of the Covid-19 pandemic and the beginning of an unprecedented surge in e-commerce.
“We actually started thinking about this contract negotiation the day I onboarded. Where the industry was going, what we needed to survive. We started thinking about this as a strategic imperative,” Tome said.
With the Teamsters contract done, Tome said she is focused on her “Better and Bolder” strategy, the next phase of her initial “Better not Bigger” philosophy which focused on modernizing and maximizing profits at the more than 115-year-old shipping and logistics giant. The “better” part seeks higher margin volume as well as increasing worker and facility productivity, while the “bolder” initiative involves using automation, artificial intelligence and other innovation to capture more business.
“In terms of generative AI, where we can really use this technology is to improve the customer experience,” Tome said. “We have over 12,000 people in our customer care centers around the world, each of them trying to interact with a customer who may have an issue. Think about how it will be when we have a ‘bot’ involved learning from that experience and sharing that learned experience around the world. Not only will it drive productivity but it will give better customer experience.” More

Sports gambling giant DraftKings apologized for a bet parlay offer that would have paid out if three New York teams won on the 22nd anniversary of the Sept. 11 terror attacks.
The vast majority of 9/11 deaths occurred in the World Trade Center’s Twin Towers in lower Manhattan, and aboard the two commercial airline jets that struck them.
To win the parlay, the New York Yankees and Mets baseball teams, and the New York Jets football team, needed to win.

In this photo illustration, the American daily fantasy sports contest and sports betting company DraftKings logo is displayed on a smartphone screen.
Budrul Chukrut | Lightrocket | Getty Images

Sports gambling giant DraftKings apologized Monday for a bet parlay offer that would have paid out if three New York teams won on the 22nd anniversary of the Sept. 11 terror attacks that killed almost 3,000 Americans.
The vast majority of 9/11 deaths occurred in the World Trade Center’s Twin Towers in lower Manhattan, and aboard the two commercial airline jets that struck and destroyed them.

The parlay DraftKings was touting earlier Monday said, “Never Forget,” a term frequently applied to the Sept. 11 attacks.
“We sincerely apologize for the featured parlay that was shared briefly in commemoration of 9/11,” DraftKings said on X, the social media site formerly known as Twitter.
“We respect the significance of this day for our country and especially for the families of those who were directly affected,” the company said.
The parlay would have paid out if the New York Yankees, Mets and Jets won Monday.
The offer elicited fierce criticism on social media before it was yanked by the company.

“Absolute clowns,” one X user wrote in reply to DraftKing’s apologetic tweet.
“Shameful,” another user wrote.
“No, you do not respect the significance of the day, nor do you respect the human beings who bet on sports with you,” read another post.
Bret Eagleson, whose father, Bruce, was killed at the Trade Center told The Associated Press, “It is shameful to use the national tragedy of 9/11 to promote a business.
“We need accountability, justice and closure, not self-interest and shameless promotion,” said Eagelson, who operates a group called 9/11 Justice.
More than 30 states and the District of Columbia have launched legal betting markets since a landmark 2018 U.S. Supreme Court case paved the way for any state to offer legal sports wagering.For 2023, the market is projected to top $7.6 billion, according to Statista Market Insights.
Ten years ago, AT&T deleted a tweet that featured a hand holding a mobile phone capturing an image of the Tributes in Light, which are two beams of light projected up from lower Manhattan showing where the Twin Towers once stood. The tweet said, “Never Forget.”
“We apologize to anyone who felt our post was in poor taste,” AT&T said in a subsequent tweet. “The image was solely meant to pay respect to those affected by the 9/11 tragedy.”
— Additional reporting by CNBC’s Stefan Sykes More

The Food and Drug Administration approved updated Covid vaccines from Pfizer and Moderna targeting the omicron variant XBB.1.5.
The Biden administration said in August that it expects the new single-strain vaccines to be available to the public in mid-September. 
Both vaccines need a recommendation from the Centers for Disease Control and Prevention before people can access them at pharmacies, clinics and health-care providers.

A health-care worker prepares a dose of the Pfizer-BioNTech Covid-19 vaccine at a vaccination clinic in the Peabody Institute Library in Peabody, Massachusetts, Jan. 26, 2022.
Vanessa Leroy | Bloomberg | Getty Images

The Food and Drug Administration on Monday approved updated Covid vaccines from Pfizer and Moderna, putting the shots on track to reach Americans within days as U.S. hospitalizations from the virus rise.
The new vaccines, which target the omicron variant XBB.1.5, are approved for people 12 and older and are authorized under emergency use for children 6 months through 11 years old, according to an FDA release.

The updated vaccines from Pfizer and Moderna won’t be available to Americans just yet.
A CDC advisory panel is scheduled to meet Tuesday to vote on a recommendation on the use of those jabs. After the CDC director signs off on those recommendations, the shots can be administered at pharmacies, health clinics and other vaccine distribution sites.
The Biden administration said in August that it expects new single-strain vaccines from Pfizer, Moderna and Novavax targeting XBB.1.5 to be available to the public in mid-September. 
The FDA did not announce a decision Monday on an updated Covid shot from Novavax, but the company said in a statement that the agency is still reviewing its vaccine. Shares of Novavax closed nearly 13% lower Monday following the approval of the other updated jabs.
Novavax’s vaccine uses protein-based technology, a decades-old method deployed in routine vaccinations against hepatitis B and shingles. Meanwhile, Pfizer’s and Moderna’s shots use messenger RNA, which teaches cells how to make proteins that trigger an immune response against Covid.

The upcoming arrival of updated vaccines offers some reassurance to Americans as the nation sees an increase in Covid cases and hospitalizations.
While the shots do not target the variants dominant now, the vaccine makers have said the shots will still offer protection against those strains as children return to school and the weather gets cooler.
“We expect this season’s vaccine to be available in the coming days, pending recommendation from public health authorities,” Pfizer CEO Albert Bourla said in a release following the approval.
Bourla and Moderna CEO Stéphane Bancel, in a separate statement, urged Americans to receive their updated Covid shot during the same appointment as their annual flu shot.
Hospitalizations have increased for seven straight weeks, and rose more than 15% for the week ending Aug. 26, to 17,418, according to the latest data from the CDC. But that number remains below the surge the nation saw in summer 2022, when hospitalizations climbed to more than 40,000.
The uptick is fueled by newer — but closely related to XBB.1.5 — strains of the virus such as EG.5, or Eris. That omicron strain accounted for 21.5% of all cases as of Sept. 2, according to the CDC. 
Meanwhile, XBB.1.5 is declining in the U.S., the CDC said. 

A resident receives a Covid-19 booster shots at a vaccine clinic inside Trinity Evangelic Lutheran Church in Lansdale, Pennsylvania, U.S, on Tuesday, Apr. 5, 2022.
Hannah Beier | Bloomberg | Getty Images

Pfizer, Moderna and Novavax have released early trial data indicating their new shots provide protection against Eris.
Both Pfizer and Moderna have also said their updated shots produced a strong immune response against BA.2.86, a highly mutated omicron subvariant that health officials are watching closely.
“The updated vaccines are expected to provide good protection against COVID-19 from the currently circulating variants,” the FDA said in the release Monday.
The agency noted that last year’s Covid boosters from Pfizer and Moderna are no longer authorized in the U.S.
The upcoming vaccine rollout will be the first since the end of the U.S. Covid public health emergency, which expired in May. 
The end of that declaration means the federal government will shift vaccine distribution to the private market, where manufacturers will sell their updated shots directly to health-care providers at higher prices. Previously, the government purchased vaccines directly from manufacturers at a discount to distribute to all Americans for free. 
Private insurers and government payers such as Medicare, which cover the vast majority of Americans, are expected to provide the vaccines to people for no fee. Federal efforts such as the Biden administration’s Bridge Access Program aim to provide free Covid shots to uninsured people.
The Biden administration will urge Americans to receive an updated Covid shot this fall, White House press secretary Karine Jean-Pierre said last week.
“Vaccinations against Covid-19 remains the safest protection for avoiding hospitalization, long-term health outcomes, and death,” Jean-Pierre said during a briefing.
But it’s unclear how many Americans will actually roll up their sleeves to get another shot in the coming months.
Only around 17% of the U.S. population — around 56 million people — have received Pfizer’s and Moderna’s latest boosters since they were approved in September 2022, according to the CDC.  More

McDonald’s will begin virtual focus groups with some owners and operators as a part of an ongoing civil rights audit, according to a message to franchisees viewed by CNBC.
In 2022, shareholders approved of a proposal by SOC Investment Group to conduct a civil rights audit in a close vote.
The fast food giant retained WilmerHale law firm to conduct the audit, the memo said.

A McDonald’s restaurant near Times Square, NYC on July 29th, 2023. 
Adam Jeffery | CNBC

McDonald’s will begin virtual focus groups with some owners and operators as a part of an ongoing civil rights audit, according to a message to franchisees viewed by CNBC.
The fast food giant retained WilmerHale law firm to conduct the examination of its practices, the memo said.

Last year, shareholders approved of a proposal by SOC Investment group to conduct a civil rights audit in a close vote. At the time, SOC urged shareholders to back the measure ahead of the company’s annual meeting, saying, “McDonald’s plans do not adequately address the company’s civil rights impact because it largely overlooks concerns with franchisees, which make up 95% of its U.S. restaurants.”
The audit aims to determine whether the company’s policies have an adverse impact on McDonald’s U.S. stakeholders, including franchisees, employees, suppliers and customers.
WilmerHale will partner with Perception Strategies, a “nationally recognized research and consulting group focused on issues of identity, dignity, and belonging, to enhance our understanding of the experience of Owner/Operators across the country and to help the company continue to promote fairness and opportunity within our system,” the memo said.
“As part of this initiative, Perception Strategies will conduct a Climate and Belonging Assessment to gain deeper insights into the experiences of our U.S. Owner/Operators,” the memo continued.
The document added that the assessment would involve inviting randomly selected franchisees to participate in one-hour virtual focus groups about their experiences. The note also assured owners that neither McDonald’s nor anyone employed by the company would participate in the groups or the selection process.

The memo said the process is voluntary and identities would not be shared with McDonald’s, and another notice said the groups would have no more than 12 people. An owner told CNBC that some franchisees were expressing concern about the 12-person panels and potential retaliation by the company.
McDonald’s said it has high corporate governance standards and a long history of being responsive to shareholders, and looks forward to reviewing the outcome of the WilmerHale audit. The process began last year following the 2022 shareholders’ meeting and is now gathering feedback from a range of stakeholders.
The audit comes as McDonald’s has made changes to its franchising structure and restaurant grading system in recent years. In December 2021, McDonald’s pledged to recruit more franchisees from diverse backgrounds, committing $250 million over the next five years to help those candidates finance a restaurant.
Current and former Black franchisees have sued the company, alleging racial discrimination. One of the suits was dismissed, while an action brought by former MLB player Herb Washington resulted in a $33.5 million settlement from McDonald’s.
The company also faces two separate lawsuits from media mogul Byron Allen, alleging discrimination in its advertising practices. McDonald’s has fired back against Allen in recent weeks, filing a motion for sanctions against the media companies owned by Allen. It claimed one of his suits was “frivolous” and “filled with allegations that he knows are false.”
The company has also committed to increase its advertising spending with Black-owned media from 2% to 5% of its ad expenses by 2024. In the filing responding to Allen, it said it was on track to meet those goals.
Other major companies including Citi, Starbucks and Airbnb have undertaken civil rights audits in recent years, and last year Apple and Amazon shareholders approved proposals for similar assessments. More