With minimum-wage increases being considered around the country, one fast food giant could suffer some negative ramifications from higher labor costs.
Higher minimum wages would have a "mildly negative" impact on McDonald's, according to Stephens restaurant analyst William Slabaugh.
McDonald's doesn't actually operate most of its U.S. restaurants, and Slabaugh explains that McDonald's reliance on franchisees provides "a bit of a buffer" from wage increases.
However, he added that forced wage hikes "could impact the health of the franchisees and therefore the health of the business," as franchisees could feel pressure to increase prices, which could cut into their traffic growth, and thus degrade the perception of McDonald's business among investors.
"Overall, it's a bad thing," he told CNBC on Thursday by phone.
Sterne Agee CRT restaurant analyst Lynne Collier said that while the wage impact is deleterious, "the other impact is a slight positive on the demand front, where the lower-income consumer gets a pay raise — and that is McDonald's customer base."
On the whole, she said, higher minimum wages are "neutral to slightly negative," and certainly not a major headwind.
Some fast-food operators see higher minimum wages as a major positive.
"Our business is great, and our business is better since the minimum wage went up," Wetzel's Pretzels CEO Bill Phelps said Thursday on CNBC's "Squawk Box."