McDonald’s CEO Says Tipping Rules Give Sit‑Down Restaurants an Advantage

McDonald’s Chairman and CEO Chris Kempczinski on Tuesday criticized the U.S. restaurant industry’s use of tipped wages, saying the system creates an ‘‘uneven playing field’’ by allowing some operators to shift labor costs to customers and receive tax advantages tied to tips.

In an interview on CNBC, Kempczinski said he supports President Donald Trump’s efforts to eliminate federal taxes on tips but noted that the move would not benefit most McDonald’s employees because they do not earn tips. "So right now, there’s an uneven playing field," he said. "If you are a restaurant that allows tips or has tips as part of your equation, you’re essentially getting the customer to pay for your labor and you’re getting an extra benefit from no taxes on tips."

Under federal law, employers may pay tipped workers a lower cash wage and count customer tips toward meeting the statutory minimum. That federal tipped minimum wage has been $2.13 an hour since 1991, with tips expected to make up the difference to reach the federal standard minimum wage. Seven states — including California, Nevada and Minnesota — require employers to pay tipped workers the full state minimum wage rather than relying on tips to make up pay.

Kempczinski framed his comments around the contrast between McDonald’s, a largely non‑tipped fast‑food operator, and sit‑down restaurants that rely on tipping. He argued that when tipping is a central part of the pay model, customers effectively subsidize labor and businesses obtain a benefit from the tax treatment of tips. That position spotlights a long‑running debate over whether tipping improves worker pay or contributes to income instability and uneven labor costs across segments of the restaurant industry.

The CEO’s remarks add a corporate voice to a broader national conversation about the role of tips and state and federal wage rules. Advocates for tipped workers often point to tips as a major source of earnings for servers and other front‑of‑house staff, while critics say tipping can mask low base wages and shift responsibility for meeting payroll to customers.

Kempczinski’s comments do not propose specific changes to McDonald’s compensation model. They do, however, underscore how differences in state laws and workplace practices can create competitive disparities between restaurants that depend on tipping and those that do not. Any changes to federal tax treatment of tips would likely affect primarily workers and businesses in the tipped‑service segment of the industry; McDonald’s executives say their workforce would not see direct benefit because the company’s frontline employees generally are not paid through tips.

The exchange on CNBC came amid continued industry and policy discussions about wages, the tip credit and the balance between base pay and gratuities across foodservice sectors. Lawmakers and regulators in some states have moved in recent years to limit or eliminate the tip credit and to raise base wages for service workers, while the federal framework allowing a reduced cash wage in tipped occupations has remained largely unchanged since the early 1990s.