Bankers Squeeze Burger King, and Tomato Pickers Lose

By Sam Pizzigati, Too Much: A Commentary on Excess and Inequality. Posted December 3, 2007.

Hundreds of migrant farmworkers marched through Miami this past Friday to protest a Florida tomato grower maneuver that will cut some tomato picker wages by 40 percent.

The growers are refusing to honor deals the state's top farmworker group has cut with McDonald's and Taco Bell to pay pickers a penny a pound more for the tomatoes they pick -- over the course of workdays that often last 12 hours.

Fast-food chains just happen to be the biggest market for Florida's tomatoes. But one fast-food giant -- Burger King -- has resisted the penny-per-pound wage increase, and that resistance, says food industry analyst Eric Schlosser, "has encouraged tomato growers to cancel the deals already struck with Taco Bell and McDonald's."

Why is Burger King so up in arms against upping farmworker wages a penny a pound?

Here's a hint: The farmworkers started their nine-mile protest march Friday at the Miami office of Goldman Sachs, the Wall Street investment banking colossus whose top power suits will shortly be divvying up somewhere between $17 and $22 billion in annual bonuses.

How are Wall Street's power suits making all those billions? They certainly, of course, don't pick tomatoes -- or even flip burgers. They flip companies. And that flipping, maybe more than any other single factor, is driving the battle over pennies currently raging in Florida's tomato fields.

The flipping at Burger King, the nation's second-largest fast-food chain, has been going on for some time now, ever since 1967 when Pillsbury bought the then 13-year-old Burger King  from the company's two independent founders.

But the Burger King flipping wouldn't become particularly frenetic until nearly two dozen years later. In 1989, Grand Met, a British company, bought out Pillsbury. Just eight years later, Grand Met merged with the Guinness beverage company to create a totally new corporation that became known as Diageo.

This new company knew something about selling beer, but next to nothing about burgers. By 2002, Burger King had become a basket case, with central headquarters and the chain's franchisees at each others' throats.

That's when three American big-money powers -- Wall Street's Goldman Sachs, the Boston-based Bain Capital Group, and the Fort Worth-based Texas Pacific Group -- partnered to shell out $1.5 billion to take the distressed Burger King off Diageo's hands.

Actually, the three partners did a good bit more borrowing than shelling. Only $325 million of the Burger King sale price came from the partners' own pockets. They borrowed the rest. That's standard operating procedure in today's big-time private equity deals.

Firms like Goldman, Texas Pacific, and Bain, typically buy up a hurting corporate property with borrowed money, then tap the company's operating cash flow -- fast food companies do generate plenty of cash -- to pay off the resulting debt.

See more stories tagged with: workplace, taco bell, exploitation, immoleekee workers, burger king

Sam Pizzigati is the editor of the online weekly Too Much, and an associate fellow at the Institute for Policy Studies.

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