Hundreds of California Pizza Hut franchises plan to lay off delivery drivers ahead of the state’s new $20 per hour minimum wage for fast food workers.
According to the Los Angeles Times, two Pizza Hut franchise owners filed notice with state and federal authorities that they plan to lay off more than 1,100 drivers in Southern California counties.
In September, Governor Gavin Newsom signed Assembly Bill 1228, which applies to California workers at fast food chains that have more than 60 locations in the U.S., mandating a $20 minimum wage, effective April 1, 2024.
The state’s minimum wage is currently $15.50 for all workers. There are more than 500,000 fast food workers in California who will be affected by the wage change.
The two Pizza Hut operators, PacPizza affiliates and Southern California Pizza Company, did not respond to questions from the Times.
But in their filings to the Worker Adjustment and Retraining Notifications in the California Employment Development Department, the companies said they “made a business decision to eliminate first party delivery services and as a result the elimination of all delivery driver positions.”
Restaurant owners opposed the new law and others like it, and earlier this year, Joe Erlinger, president of McDonald’s USA, wrote an open letter saying, “California has become a dramatic case study of putting bad politics over good policy.”
McDonald’s announced in an earnings call last month that its menu prices rose over 10 percent in 2023, which is on top of a 10 percent increase in 2022.
During the call, CEO Chris Kempczinski told analysts, “There will certainly be a hit in the short-term to franchisee cash flow in California.”
