In response to California’s minimum wage increase to $20 an hour for fast food workers in 2024, certain Pizza Hut franchisees are reportedly contemplating job cuts and alterations to delivery services, impacting workers and customers alike.
As initially reported by ABC News Los Angeles station KABC, two prominent Pizza Hut franchisees, operating across Orange, Los Angeles, Riverside, San Bernardino, and Ventura counties, are strategizing mass layoffs that could affect approximately 1,200 employees. An additional 800 workers at Pizza Hut locations in Sacramento, Central California, Southern Oregon, and the Reno-Tahoe area are also expected to be impacted, according to KABC.
The proposed job cuts would coincide with the discontinuation of delivery services in these locations, leaving customers to rely on third-party services like Uber Eats or DoorDash for their pizza orders.
Acknowledging the developments, a Pizza Hut spokesperson stated, “Pizza Hut is aware of the recent changes to delivery services at certain franchise restaurants in California. Our franchisees independently own and operate their restaurants in accordance with local market dynamics and comply with all federal, state, and local regulations, while continuing to provide quality service and food to our customers via carryout and delivery.”
Yum! Brands, the owner of Pizza Hut, emphasized that delivery services would remain accessible through the Pizza Hut mobile app, website, and phone ordering.
The catalyst for these decisions, according to franchisees, is the wage legislation (AB 1228) signed into law by California Governor Gavin Newsom in late September. Effective from April, the law mandates a minimum wage of $20 per hour for fast food workers, a $4 increase compared to the state minimum wage of $16, set to take effect on January 1.
The potential impacts of the new law on operating costs and menu pricing have been echoed by other fast-food companies, including McDonald’s and Chipotle. Chipotle CEO Jack Hartung noted on a November earnings call that pricing adjustments would be necessary to cover the increased costs associated with the higher minimum wage.
While a final decision on the job cuts and service changes has not been officially announced, the situation highlights the ongoing challenges faced by the fast-food industry in adapting to evolving labor regulations.
