The announcement came on the heels of a survey of 500 New
York City fast-food employees at chains such as McDonald’s Corp
, Burger King and Domino’s Pizza.

Eighty-four percent of survey respondents said they were
victims of at least one form of wage theft – ranging from
overtime violations to being to forced to work while clocked out
on a break – in the past year.

“The findings in this report are deeply troubling and shed
light on potentially broad labor violations by the fast food
industry, which employs thousands of New Yorkers. We take the
allegations seriously,” Damien LaVera, spokesman for New York
Attorney General Eric Schneiderman, said in a statement.

The nearly $200 billion U.S. fast-food industry long has
been known as an employer of teenagers and students. But the
18-month “Great Recession” that began in December 2007 has
forced more adults to seek often minimum-wage work flipping
burgers and operating fryers.

In recent months, hundreds of fast-food workers have taken
to the streets in major cities such as New York, Chicago, St.
Louis and Detroit demanding better pay and working conditions.

The majority of fast-food restaurants that are part of
large publicly held chains are owned and operated by independent
business owners known as franchisees. Those operators set pay
for their employees.

The New York attorney general’s office has issued subpoenas
to one fast-food parent corporation and is investigating several
franchisees operating in the state, according to a person
familiar with the matter, who spoke on the condition of
anonymity due to the ongoing investigation.

The office is probing a variety of alleged violations,
including the use of sub-minimum wages, unpaid overtime, bounced
paychecks and insufficient reimbursement for work related
expenses such as delivery costs, that person said.

Those practices were highlighted in the worker survey, which
was commissioned by Fast Food Forward, an activist group backed
by labor, community and religious groups. It has been organizing
protests seeking to roughly double the workers’ hourly wage to
$15. It also is pressing for the right to unionize without
interference.

Domino’s Pizza Inc received a subpoena related to
the probe, company spokeswoman Lynn Liddle said.

Employees of company-owned Domino’s restaurants are hired at
minimum wage – which is $7.25 or up, depending on the area – and
also receive tips. Drivers also get a “per run fee,” which
varies by market and the price of gas, Liddle said.

The average pizza delivery driver makes more than $10 per
hour, she said.

McDonald’s said in a statement that its employees are paid
competitive wages in accordance with all federal and state wage
laws.

The world’s biggest restaurant chain by revenue also said it
“has not been contacted regarding any investigation by the New
York Attorney General and to the best of our knowledge nor have
McDonald’s independent owner operators.”

(Reuters) – Hundreds of fast-food employees in Detroit walked off the job on Friday, temporarily shuttering a handful of outlets as part of a growing U.S. worker movement that is demanding higher wages for flipping burgers and operating fryers.

The protests in the Motor City – which is struggling to recover from the hollowing out of its auto manufacturing sector – marked an expansion in organized actions by fast-food workers from ubiquitous chains owned by McDonald’s Corp, Burger King Worldwide and KFC, Taco Bell and Pizza Hut parent Yum Brands Inc.

Fast-food workers, who already have taken to the streets in New York, Chicago and St. Louis, are seeking to roughly double their hourly pay to $15 per hour from around minimum wage, which in Michigan is $7.40 per hour.

Organizers said more than 400 people turned out for the Detroit event, the most to date.

They also said the walk-outs forced the temporary closures of two McDonald’s restaurants, a Burger King, a Subway, a Long John Silver’s and a Popeyes in Detroit – a claim some chains disputed.

Outside a Burger King on 8 Mile in Detroit, employee Claudette Wilson said she’s tired of poor wages, especially at a time when the fast-food industry continues to grow.

“I make minimum wage, which is what I made when I started working in fast food three years ago,” the 20-year-old college student said. “I can’t understand how the industry is growing but our wages aren’t.”

Organizers said the Detroit metro area has 53,000 fast-food jobs, which pay at or just above minimum wage.

The fast-food workforce is twice as large as that of the region’s famed auto manufacturing sector and is projected to grow faster than the region’s overall workforce in the coming years, organizers said.

“People can’t make a living at $7.40 a hour,” said Rev. Charles Williams II, a protest organizer. “Many of them have babies and children to raise, and they can’t get by with these kind of wages.”

Those workers face high hurdles in their fight for better pay. Low-wage, low-skill workers lack political clout and face significantly higher unemployment than college graduates.

U.S. President Barack Obama proposed raising the federal minimum wage in his State of the Union address as a way to help lift some workers out of poverty. But critics of such a move, including representatives for the nearly $200 billion U.S. fast-food industry, say it would kill jobs by burdening small businesses with higher costs.

PROTESTS, DISPUTES

At a Long John Silver’s on Detroit’s east side, a lone manager tended the restaurant as the presence of protesters appeared to stifle business.

A McDonald’s spokeswoman told Reuters its Michigan restaurants were “open, and operating as usual”. Burger King said none of its restaurants were shut down and no workers walked off the job.

Representatives from Subway, Long John Silver’s and AFC Enterprises’ Popeyes did not immediately respond to requests for comment.

Margaret Neal, 52, said frustration with the low wage she earns after more than a decade working at a McDonald’s in Detroit prompted her to join Friday’s protests.

Asked about her pay, Neal said: “You don’t even want to know, I’ve been there 15 years. I’m still making $8.83 (an hour). That’s not right.”

Neal, who works full-time, says her bosses have told her she is “maxed out” at her current wage and ineligible for an increase.

The vast majority of McDonald’s more than 14,000 U.S. restaurants are owned and operated by franchisees. The company said in a statement that McDonald’s employees are paid competitive wages, have access to a range of benefits and opportunities for training and career advancement.

The Detroit action was put together by the Michigan Workers Organizing Committee, an independent union of fast-food workers, that is supported by community, labor and faith-based groups such as the Interfaith Coalition of Pastors, UFCW Local 876, SEIU Healthcare Michigan and Good Jobs Now.

(Editing by David Gregorio)

An expected sharp spike in food prices from last summer’s
historic drought has failed to arrive, giving restaurant
operators “more ammunition to play the promotional and value
game if they want to,” said Edward Jones analyst Jack Russo.

Fast-food chains in the United States and other countries
around the globe are struggling to increase traffic and sales as
persistent economic weakness has taken a big toll on the low-
and middle-income diners who are their chief customers.

McDonald’s on Wednesday reported an unexpected 0.7 percent
rise in April sales at established U.S. restaurants, helped by
the national release of premium McWraps with discounted
introductory prices, value food options and continued strength
in breakfast items.

Still, the world’s biggest restaurant chain by revenue is
struggling to meaningfully boost sales after a long run of
outperforming smaller rivals, which of late have been more
nimble in introducing attention-getting menu items.

McDonald’s has vowed to roll out more limited-time offers
and other deals, along with more new food. And, it has said it
is willing to sacrifice some profitability to win market share.

First-quarter sales at established Wendy’s North America
restaurants also were up, but less than analysts expected, and
its shares fell over five percent.

Executives at the chain known for its square, fresh beef
hamburger patties and thick Frosty shakes, said it lost ground
in the low-priced food fight – something it plans to fight with
marketing and advertising for food priced around 99 cents.

“We have been growing large hamburger, large chicken
sandwich and salad sales, but losing share for value menu
customers,” Wendy’s Chief Executive Emil Brolick said on a
conference call with analysts.

The 99-cent price shoppers are heavy fast-food users “and
you need to continually remind them that you have products
available for them every day,” Brolick said.

Elsewhere, Yum Brands Inc’s Taco Bell – long known
for being a purveyor of very inexpensive food – is testing a “$1
Cravings” menu that may go national. It is also advertising $1
“Happier Hour” offers from 2 p.m. to 5 p.m.

And, the battle for cash-strapped customers is not limited
to the United States.

Canada-based Tim Hortons Inc, which has
consistently delivered strong results, on Wednesday said
same-store sales in the United States fell 0.5 percent in the
first quarter, while sales in Canada slipped 0.3 percent.

April softness in McDonald’s Europe, Asia/Pacific, Middle
East and Africa regions more than offset the
better-than-expected U.S. growth in sales at restaurants open at
least 13 months.

McDonald’s April same-restaurant sales fell 2.4 percent in
Europe – where austerity measures and other financial woes have
dampened demand – and 2.9 percent in the Asia/Pacific, Middle
East and Africa (APMEA) region – where results have been hurt by
an outbreak of bird flu.

Shares of McDonald’s were down 1 percent to $101.17 in
afternoon trading, while Wendy’s stock was down 5.7 percent to
$5.77. U.S.-traded shares of Tim Hortons were off 3.1 percent to
$56.58.

(Reuters) – Herbalife Ltd posted surprisingly strong quarterly earnings and raised its full-year profit forecast on Monday, putting pressure on high-profile investor Bill Ackman, who is betting against the nutritional products company.

Ackman’s Pershing Square Capital has a $1 billion bet against the “multi-level marketer” whose weight loss products are sold through a network of independent individuals. In recent months Ackman has called the Los Angeles-based company “a pyramid scheme” and predicted that its shares will eventually be worthless.

Herbalife executives, who have been befriended by hedge fund titan Carl Icahn, told Reuters that the company’s global growth speaks for itself.

“The proof is in the results. Ultimately people will realize that Bill Ackman’s reckless bet is based on an unfounded hypothesis,” Herbalife President Des Walsh told Reuters in an interview.

“The resilience of our customer base and our distributor base will continue to show that he’s wrong and dead wrong,” Walsh said.

BIG BEAT

Herbalife’s first quarter net income grew to $118.9 million, or $1.10 per share, in the first quarter, compared with $108.2 million, or 88 cents per share, a year earlier.

Excluding a hit from the devaluation of Venezuela’s currency and expenses related to defending the company from criticism by Ackman and other high-profile investors, the company earned $1.27 a share during the quarter – 20 cents more than the average of analysts’ estimates compiled by Thomson Reuters I/B/E/S.

Net sales rose 17 percent to $1.1 billion.

Based on those results, Herbalife raised its 2013 forecast for adjusted earnings per share to a range of $4.60 to $4.80 from $4.45 to $4.65 previously.

Herbalife shares, which have been volatile due to the debate over its future, slipped 0.9 percent to $38.42 in extended trading. The shares plummeted from about $45 to about $25 at the time of Ackman’s attack in December.

Icahn, another closely watched investor, rushed to the firm’s defense – taking a stake and putting two representatives on the Herbalife board in February.

But the company also disclosed in February that its operations have been the subject of an inquiry by the U.S. Securities and Exchange Commission’s Division of Enforcement since late last year.

It was later discovered that a senior KPMG auditor for Herbalife was leaking nonpublic information about the company in exchange for money, forcing the firm to resign from Herbalife’s service.

(Reporting by Martinne Geller in New York and Lisa Baertlein in Los Angeles; Editing by Richard Chang)

The forecast sent shares of the world’s biggest fast-food
chain down 1.8 percent to $100.10 in morning trading.

The shares recently hit a record high above $103 on
expectations that results would improve in the second half of
2013, when the chain will no longer be up against year-earlier
U.S. results that were bolstered by unseasonably warm winter
weather.

Results were expected to improve in April because the
company would only have to top 3.3 percent growth in global
restaurant sales in April 2012. By comparison, sales were up a
whopping 7.7 percent in March 2012.

The McDonald’s forecast for April “does put a little bit of
a damper on the theory that as soon as comparisons got easier,
comps were going to take off,” Bernstein Research analyst Sara
Senatore said.

While investors and analysts are giving McDonald’s new chief
executive, Don Thompson, and his management team time to revive
restaurant sales, they could get impatient as the year wears on.

“There will be some pressure on the guys to pick up the
pace,” Edward Jones analyst Jack Russo said.

McDonald’s reported first-quarter profit that fell short of
Wall Street expectations as global comparable sales fell 1
percent – slightly less than the 1.1 percent decline forecast by
analysts polled by Consensus Metrix.

Net income inched up 0.3 percent to $1.27 billion, or $1.26
per share. Analysts, on average, were looking for $1.27 per
share, according to Thomson Reuters I/B/E/S.

First-quarter revenue rose 0.9 percent to nearly $6.61
billion, higher than the $6.59 billion estimated by analysts.

The “challenging” global environment and profit pressures
are expected to persist, Thompson said in a statement.

Fast-food chains like Burger King Worldwide Inc,
Wendy’s Co and Yum Brands Inc’s Taco Bell have
introduced new U.S. menus and are doing a better job of
competing with McDonald’s. At the same time, frugal diners have
been shopping for deals.

Cautious spending is not limited to the United States.

McDonald’s Japan plans to introduce a new “Value Pick” line
starting on May 7, including the value-priced McDouble sandwich.
It also is revising prices – cutting the price of its small
french fries but raising the prices of its hamburgers and
cheeseburgers.

The bipartisan group of senators unveiled on Tuesday their
proposal for immigration reform that would remove the threat of
deportation for millions of undocumented workers and open a door
for them to one day become U.S. citizens.

Espinoza, 32, lives with her U.S.-born daughter but is
missing the other four children she left behind in Mexico so she
could work in the strawberry fields in Oxnard, California, where
pickers can take home $80 to $100 a shift on good days.

If not for the promise of legislation, she said on Tuesday,
“I would be there right now.”

“It’s been too long. I want to see them now. I can’t
because, if this legislation passes, I’ll have papers and I
won’t have to worry,” said Espinoza, who is from Oaxaca, Mexico,
and has not seen her children there during her latest four-year
stay in the United States.

“I hope this time they’re going to do it and not just talk
about it,” she said.

The proposed bill, which President Barack Obama endorsed on
Tuesday, gives farm laborers like Espinoza a faster path toward
U.S. citizenship than other undocumented workers.

It would give legal status to undocumented workers who were
employed in agriculture in the past two years. After five to
seven years, they could apply for permanent residency. Other
workers would have to wait 10 years.

United Farm Workers union President Arturo Rodriguez
estimates that a million farm workers and their families could
gain legal status under the Senate bill.

“This is a huge step forward,” Rodriguez said, adding that
the workers would be able to buy cars and homes, engage openly
in society and travel without fear. They also would have more
protections on the job.

While the bill is touted by its Republican and Democratic
supporters as the best chance to overhaul immigration since the
1980s, it will likely face a months-long battle, with the
biggest challenge expected in the Republican-led House of
Representatives.

Pro-reform advocates like Rodriguez have also said it is
time for the United States to have a legal workforce to produce
its food. A large part of the agricultural workforce, 60 percent
by one estimate, is undocumented but is vital for growing fruit,
vegetables and other crops and tending livestock.

In California, laborers from Mexico and Central America help
make it the No. 1 farm state, with over $43 billion in cash
receipts in 2011.

The state also supplies some 85 percent of the country’s
strawberries, and no place is more abundant in that crop than
Oxnard, 60 miles (100 km) west of downtown Los Angeles. Crews
stoop in the green rows that stretch over the flat plain,
plucking the red fruit with swift flicks of the wrist.

While the passage of legislation will allow them to stay and
work, some workers appear to be just as interested in the
ability to leave.

Adolfo Rodriguez Lopez, 41, has never returned to Mexico to
visit his wife and four sons in Ensenada, Mexico, during the 12
years he has lived in the United States.

“When they get sick and you need (to) see them, you’re not
able to,” said Rodriguez Lopez.

“Not only is it important (to) see my family, there is a
certain tranquility of knowing that you’re legally here and
don’t have to worry about the police,” he said.

Competition in the coffee grocery aisle is intense and
Starbucks’ move follows price reductions by rival packaged
coffee sellers earlier this year.

Starting next month, the suggested retail price on 12-ounce
packages of Starbucks coffee will fall to $8.99 from $9.99 and
Seattle’s Best will go to $6.99 from $7.99.

Starbucks’ price cuts apply only to packaged coffee sales
through other retailers. They do not apply to packaged coffee
and prepared drinks sold in the company’s own shops, spokeswoman
Lisa Passe said.

In February, top U.S. packaged coffee maker J.M. Smucker Co
reduced suggested retail prices on poplar brands such as
Folgers and Dunkin’ Donuts by an average of 6 percent.

Kraft Foods Group Inc quickly followed with a
similar price cut for its Maxwell House and Yuban brands.

Arabica coffee futures hit the lowest level in nearly
three years in mid-March at $1.3405 per lb, down more than 55
percent from the 34-year high above $3 per lb, reached in May
2011.

The price drop has been so dramatic that some makers of
instant coffee, which is often made from the typically cheaper
and more bitter-tasting robusta bean, have begun to buy arabica
beans for their blends. [ID: nL2N0CF0A3]

The benchmark July arabica coffee futures contract
trading on ICE Futures U.S. closed up 0.80 cent, or 0.6 percent,
at $1.3915 per lb on Thursday.

(Reuters) – Burger King Worldwide Inc (BKW.N: Quote, Profile, Research, Stock Buzz) forecast a slightly higher quarterly profit on Thursday than Wall Street expected, even though spending among fast-food diners remains weak.

The hamburger chain, which has a long history of ownership and management changes, also said Chief Executive Bernardo Hees will leave to take over at H.J. Heinz Co (HNZ.N: Quote, Profile, Research, Stock Buzz).

The company’s shares were up 4.1 percent in afternoon trading.

Burger King expects first-quarter adjusted earnings of 17 cents per share – a penny higher than the average analyst estimate complied by Thomson Reuters I/B/E/S.

The company expects sales at restaurants open at least 13 months to fall 1.5 percent globally and 3 percent in the United States and Canada in the first quarter, slightly more than Wall Street’s average estimates.

But it said sales were up in March after it found the right recipe for value food offers.

The company known for its flame-broiled Whopper hamburgers went public in June 2012, less than two years after it was taken private by Brazilian investment fund 3G Capital Management LLC, which retains a nearly 70 percent stake.

The chain’s new owners have slashed costs, sold restaurants to operators, boosted franchisee field support staff and introduced items such as salads and smoothies to broaden its customer base beyond young males.

Burger King shares were up 67 cents at $19.13 in midday trading. Its board also approved a 20 percent rise in the dividend.

MANAGEMENT SHAKEUP

Hees, 43, has led Burger King since its October 2010 sale to 3G and will become Burger King’s vice chairman after he switches companies.

Daniel Schwartz, Burger King’s chief financial officer, will succeed Hees as CEO and Joshua Kobza be promoted to CFO.

Hees will replace William Johnson as CEO of Heinz upon the completion of the ketchup seller’s $23.2 billion acquisition by Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz) and 3G, or on July 1, whichever comes first.

Heinz had no comment on the CEO change.

Johnson stands to walk away from the company he led for 15 years with more than $212 million – a “golden parachute” worth about $56 million, nearly $100 million in vested equity and $57 million in other deferred compensation.

Last month, when Heinz filed its proxy, spokesman Michael Mullen said the payments reflected Johnson’s success in creating billions of dollars in shareholder value over his 15-year tenure as CEO.

(Additional reporting by Jessica Wohl in Chicago and Siddharth Cavale in Bangalore; Editing by Gerald E. McCormick, Chizu Nomiyama and Andre Grenon)

The U.S.-listed firm, the world’s largest restaurant company
by number of outlets, said in a filing Wednesday that the latest
deadly avian flu outbreak would have a “significant, negative
impact” on sales at KFC stores in China in April.

Analysts said the company’s problems in China – which
accounts for more than half its global sales – were deeply
rooted, and that sales which started slowing before the chicken
scare would need more than a flu-jab to revive.

“KFC has got off to a very bad start this year, it’s had a
double whammy of incidents. But increasingly there’s also much
stiffer competition from local quick service restaurants firms,”
said Frank Gibson, an independent business consultant based in
Shanghai.

“Longer term it will be hard for them to maintain the growth
they’ve experienced in the past, but this will be more due to a
more complex and dynamic environment than necessarily due to the
issues they faced in the first quarter of this year.”

Yum’s troubles in China began in December when it was
accused of selling chicken laced with excessive chemicals. It
was cleared of any wrongdoing and publicly apologised over its
handling of the affair, but that did not spare it being accused
of “arrogance” by the state-run Xinhua news agency.

Sales were beginning to recover when they were hit again by
a new outbreak of bird flu, which has killed nine people so far
and stirred fresh fears about the safety of poultry products.

CONSUMER CONFIDENCE

Beijing-based food and agribusiness analyst Chenjun Pan, at
Rabobank International, said consumer confidence would take many
months to recover.

“While the area affected is still in the east of China, the
consumer confidence impact is nationwide,” she added, saying the
impact would be greater than previous bird flu outbreaks.

Some restaurants, airlines and schools in the commercial
capital of Shanghai have taken poultry off the menu in response
to the latest health scare, local media reported.

Several KFC outlets which Reuters visited were quieter than
normal and had signs citing World Health Organisation assurances
that cooked chicken is safe to eat.

Not everyone was convinced.

“I avoid eating chicken these days. Not only KFC, but also
McDonald’s and so on,” Moon Li, a Shanghai woman in her
20s, told Reuters.

China’s popular microblog Weibo was abuzz with talk of
giving up chicken and other meat.

“Recently I’ve decided to become a vegetarian,” wrote ‘A
Qiong Smile’ on China’s equivalent of Twitter.

Yum said in Wednesday’s filing it plans to educate
consumers, as it has done in the past, that properly cooked
chicken is safe to eat.

Sales at Yum’s China restaurants that have been open for at
least one year fell 13 percent in March, more than the 10
percent average drop expected by analysts polled by Consensus
Matrix.

The March results included a 16 percent drop at KFC and a 4
percent rise at Pizza Hut. Yum is due to report its
first-quarter earnings on April 23.

Yum shares fell more than 2 percent to $65.20 in extended
trading following the report. Yum’s stock traded around $72 in
late March before reports of the first avian flu deaths.

(Reuters) – KFC parent Yum Brands Inc warned that a new bird flu outbreak in China badly hit restaurant sales there this month, even as the company also reported a sharper-than-expected slide in March sales in the country caused by the lingering impact of a separate food safety scare.

“Within the past week, publicity associated with Avian flu in China has had a significant, negative impact on KFC sales,” the company said in a regulatory filing on Wednesday.

Yum did not quantify the impact.

The bird flu outbreak has already sickened 33 and killed nine, as Chinese authorities try to clamp down on rumors about the deadly virus and its potential spread.

Yum reaps more than half its overall sales in China, where most of its nearly 5,300 restaurants are KFCs. It was already struggling in the country after chemical residue was found in a small portion of its chicken supply late last year.

“This will set them back a little bit. If those (bird flu casualty) numbers go up, then the impact could be longer,” said Edward Jones analyst Jack Russo.

Sales at Yum’s China restaurants open at least one year fell 13 percent in March, more than the 10 percent average drop expected by analysts polled by Consensus Matrix.

The March results included a 16 percent drop at KFC and a 4 percent rise at Pizza Hut.

The company plans to educate consumers, as it has done in the past, that properly cooked chicken is safe to eat, Yum said in Wednesday’s filing.

In February, KFC’s sales were flat in China, which had given analysts some hope a turnaround was already taking hold.

While the March results were disappointing, they may show that the effects of the timing shift of the all-important Chinese New Year holiday on January and February were bigger than expected.

“I don’t think we should interpret this, necessarily, as a step back,” Sanford Bernstein research analyst Sara Senatore said.

Yum shares fell more than 2 percent to $65.20 in extended trading following the report. Yum’s stock traded around $72 in late March before reports of the first deaths from the novel strain of avian flu.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Phil Berlowitz, Matthew Lewis and Andre Grenon)