(NationalUSNews.com) — California-based Pizza Hut franchisees claim they’re preparing to lay off more than 1,000 Pizza Hut employees due to the recent increase of California’s minimum wage to $20 an hour. Franchisees are also considering alternative delivery methods for customers, as the majority of layoffs will affect delivery drivers. The layoff announcement comes from two massive Pizza Hut franchisees located in Orange, Los Angeles, Riverside, San Bernadino, and Ventura counties. The planned layoffs will impact around 1,200 Pizza Hut employees in the aforementioned counties.
The layoffs will also affect 800 Sacramento, Central California, Oregon, and Reno employees. According to franchisees, the layoffs will remove delivery services for Pizza Hut in these locations. The franchisees said that customers in these regions must rely on third-party delivery services, such as Doordash or Uber Eats. The use of third-party delivery services causes an additional burden on customers due to the inflated price of delivery and online fees. Pizza Hut released a statement about the layoffs, claiming it lacks authority over franchisees since they operate independently.
A spokesperson for Pizza Hut discussed the new California-area layoffs, claiming that Pizza Hut franchises operate in accordance with state and federal law. The spokesperson failed to address the impending cessation of delivery services in the statement. Pizza Hut’s parent company, Yum! Brands, claimed that delivery would remain available via online and phone orders for the foreseeable future. Other fast-food restaurant chains, such as Taco Bell, aren’t addressing the minimum wage increase at this time.
The minimum wage increase stems from AB 1228, a California bill signed into law by Governor Gavin Newsom in September 2023. The new law raised California’s minimum wage from $16 per hour to $20 and became active on January 1st. Fast-food chains like Chipotle and McDonald’s opposed the new law, claiming the measure would negatively impact businesses throughout California. Chipotle CEO Jack Hartung addressed the legislation during an earnings call in November, indicating a change in Chipotle’s pricing to address the increase in wages.
Hartung said that the Mexican fast-food brand would likely raise menu prices to account for the decrease in profit, with other chains like McDonald’s likely planning to follow. Despite the increase in food prices and reduction in employment, California Governor Gavin Newsom claims the new legislation is a success for California’s working-class members.
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