Byron Allen’s $10 Billion Lawsuit Against McDonald’s Moves Forward

McDonald's Lawsuit Byron Allen

Allen Media Group Owner Accuses McDonald’s of Racial Stereotyping

A $10 billion lawsuit against McDonald’s Corp., which alleges racism in the fast-food chain’s advertising allocations, has taken a significant step forward. The suit by media entrepreneur Byron Allen accuses McDonald’s of “racial stereotyping” by short-changing Black-owned media with its ad purchases. The case is expected to proceed to jury trial next May. 

Photo: Allen Media Group

In his mid-September ruling, U.S. District Judge Fernando Olguin gave Allen an opportunity to prove allegations that McDonald’s violated U.S. and California civil rights laws by deciding that the company would direct the “vast majority” of its ad dollars away from his networks, Reuters reported. As a result, McDonald’s will have to defend itself in court. The restaurant giant had asked Olguin to dismiss the suit. 

Statements by Judge and Defense

Olguin did not rule on the merits of Allen’s case but cited allegations that since 2009, Entertainment Studios had repeatedly tried but failed to land an advertising contract with McDonald’s Corp. Allen, the media company’s CEO, contends that the company’s “racist” corporate culture harmed him financially. “Taken together, and construed in the light most favorable to plaintiffs, plaintiffs have alleged sufficient facts to support an inference of intentional discrimination,” Olguin wrote in his ruling.

McDonald’s lawyer Loretta Lynch issued a statement that the Chicago-based company viewed the lawsuit as “about revenue, not race.” The statement by Lynch, a former U.S. attorney general, also says that “plaintiffs’ groundless allegations ignore both McDonald’s legitimate business reasons for not investing more on their channels.” 

Alleged Financial Losses

Allen’s suit contends that McDonald’s had relegated his Entertainment Studios Networks Inc. and Weather Group LLC, which owns the Weather Channel, to an “African American tier” with a considerably lower ad budget, Reuters reported. That decision, Allen asserts, diverted tens of millions of dollars away from his media holdings each year. The suit says that this tier structure constitutes a separate, unequal situation that is discriminatory.

In a news release after Olguin’s ruling, Allen Media estimated McDonald’s annual ad budget at $1.6 billion but says it spent only about $5 million annually to advertise with African American-owned media. To put the spending choices and inequity into perspective, Allen Media says McDonald’s President and CEO Chris Kempczinski makes some $11 million a year, or more than double what the company spends per year in ads on all Black-owned media. 

McDonald’s Lawsuit Allegations

Allen said his suit revolves around “economic inclusion of African American-owned businesses in the U.S. economy. McDonald’s takes billions from African American consumers and gives almost nothing back.” Blacks make up 40% of the company’s customers, the suit said, but McDonald’s spent just 0.3% of its $1.6 billion American ad money on Black-owned media during 2019. 

The biggest trade deficit in America is the trade deficit between White corporate America and Black America, and McDonald’s is guilty of perpetuating this disparity.

Byron Allen

In Allen Media’s news release about the lawsuit, the media company alleged that senior McDonald’s executives, including Kempczinski, made racially derogatory comments indicative of racial hostility. “The biggest trade deficit in America is the trade deficit between White corporate America and Black America, and McDonald’s is guilty of perpetuating this disparity,” CEO Allen stated in the news release. “This is about economic inclusion of African American-owned businesses in the U.S. economy.”

Allen Media Group

Allen Media Group owns 27 ABC-NBC-CBS-FOX network affiliate broadcast television stations in 21 U.S. markets and a dozen 24-hour HD television networks serving nearly 220 million subscribers, the news release says. It has headquarters in Los Angeles, plus offices in New York, Chicago, Atlanta and Charleston, S.C. 

Allen founded Allen Media Group/Entertainment Studios in 1993. Allen Media said McDonald’s has not advertised on Entertainment Studios networks or The Weather Channel since Allen acquired it in 2018. 

Racism Allegations Against McDonald’s 

During the past two years, the McDonald’s franchise has been the subject of media reports linking it to racist actions and attitudes. In mid-December of 2021, McDonald’s disclosed that, as part of a settlement, it would buy 13 restaurants from Black franchisee Herb Washington, according to a report in  Washington was one of several franchisees who had sued the corporation with allegations of racism. 

But the McDonald’s franchise has taken steps to improve. Also, late last year, but before the Washington deal was revealed, the company announced a $250 million initiative to increase the ranks of its minority franchisees. And in May 2021, McDonald’s disclosed plans to increase its national ad spending with Black-owned media to 5% by 2024; before that, ads in Black-owned media amounted to only 2% of the corporate ad budget.

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Mary Vinnedge is an award-winning writer who has served as editor in chief, managing editor and senior editor at national and regional publications, including SUCCESS and Design NJ magazines. A seasoned journalist, Mary covers the latest franchising news in her role as staff writer for FranchiseWire.
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