They don't provide lower wages than independent shops for similar positions, it's all above board, and they are happy to hire students. I am not convince that they price competitors out, either.
The industry is hard and opening a restaurant or coffeeshop is very hard. I think the thing is that the like of McDonald's and Costa are expert and know how it works, while the person who "always dreamed of opening their own coffeeshop" might not be realistic about what's required.
Also, these days people work far away for customers that are possibly all over the world. They use their money to buy products that come from all over the world. So what does 'local economy' mean? Providing local jobs is good whoever does it.
I think McDonald's are often franchises so they are local busineses even if of course they have to pay to the "mothership".
I know this is about the UK, but just as an FYI, in the US, small service sector employers provide an even lower wage because they rarely offer tax advantaged benefits that big businesses can offer, such as subsidized health insurance premiums paid with pre tax income, and paying for retirement savings/public transit/daycare/life insurance/etc with pre tax income.
It is amazing the advantages big businesses have that can afford the time and money expenses of the paperwork for providing those tax advantaged benefits.
BTW the laws weren't changed to level the playing field for small companies, it was just our equivalent of IRS fixing loopholes to bring in more tax money.
McDonald's and the rest provide very low wage jobs to locals while leveraging their economies of scale to undercut local competitors on price, while all the profits go into the balance sheet of a company that's headquartered far away, sometimes in a different country.
They are precisely not the local economy as much as those other shops for that reason.