Marketing

Black media mogul sues McDonald's for $10B alleging ad spend bias

May 21, 2021

On the same day McDonald's announced the company will accelerate its investment of ad dollars in "diverse-owned" media companies, the company was sued for at least $10 billion by a media business owner who alleges the QSR fails to advertise enough with Black-owned media outlets, Reuters reported.

Byron Allen, the plaintiff in the case filed in Los Angeles County Superior Court, owns two media companies, including The Weather Channel and lifestyle channel company, Allen's Entertainment Studio Networks. The suit alleges McDonald's violated federal and state civil rights laws through what the complaint said has been "racial animus and racial stereotyping" in McDonald's advertising spend allocation, including refusing to advertise with Allen's companies.

The complaint said Blacks comprise about 40% of McDonald's customers, but the company devoted less than $5 million of its $1.6 billion U.S. ad budget in 2019 to Black-owned media.

"McDonald's, like much of corporate America these days, publicly touts its commitment to diversity and inclusion, but this is nothing more than empty rhetoric," the complaint said.

On Thursday the Chicago-based QSR giant announced it was increasing ad spend with Black-owned media from 2% to 5% over the next three years, while also investing additional dollars in Asian-American, Hispanic, LGBTQ and women-owned media.

In the U.S. alone, McDonald's has more than 14,000 stores. Additionally on Thursday, the company's board declared a quarterly cash dividend of $1.29 per share of common stock payable on June 15 to shareholders of record at the close of business on June 1.