California Pizza Hut Operators Laying off All Delivery Drivers Due to Mandated Wage Increase

In their seemingly never-ending quest to make lives for Californians miserable, the state legislature passed a bill that Governor Newsom signed into law mandating a $20 minimum wage for fast food workers by April of 2024.

Now you'd think that would be great for the workers, who are often low-income and could use the extra money. But that can only happen if they have a job... and for at least 1,200 employees, they soon won't as multiple Golden State Pizza Hut franchises, collectively operating hundreds of stores, are laying off all their in-house drivers.

PacPizza LLC, operating as Pizza Hut, said in a federal WARN (Worker Adjustment and Retraining Notification) Act notice filed with California's Employment Development Department that the company has made a business decision to eliminate first-party delivery services and, as a result, the elimination of all delivery driver positions. Similarly, Southern California Pizza Co. has also announced layoffs, impacting about 841 drivers across the state.
The decision impacts Pizza Hut locations in Sacramento, Palm Springs, Los Angeles and other areas.

Who could have predicted this entirely predictable outcome?

“Two large Pizza Hut operators in California are laying off all their delivery drivers ahead of a new state law that raises the minimum wage for fast-food workers to $20 an hour, Business Insider reports.” https://t.co/jK08lN0MGv
— Carol Roth (@caroljsroth) December 26, 2023

Fast good giant McDonald's slammed the bill in September, saying it would raise the projected annual cost of each restaurant by $250,000.

For the pizza drivers, the prospect of losing their jobs is concerning:

For the affected delivery drivers—some of which Newsweek has reached out to via social media channels—the change comes as a shock, with many expressing dismay over the severance offers and the timing of the layoffs.
The drivers, who now face the reality of unemployment in the coming year, have voiced concerns about the impact on their livelihoods and the broader implications for workers in similar positions.
One driver, who had been working for Pizza Hut for nine years, anonymously spoke to Business Insider and said that he was offered $400 severance if he stayed on staff until his February 5 layoff date.

For restaurants, meanwhile, they're struggling to give out how to deal with their operating costs shooting starkly higher:

The current minimum wage in California is $16 per hour and will increase to $20 in April. The move by the Pizza Hut operators is representative of broader adjustments within the fast-food industry in response to the new labor law, AB 1228, replacing the controversial FAST Act.
While the law aims to elevate the earnings of fast-food workers, it has sparked varied reactions from within the industry, prompting many restaurant operators outside of Pizza Hut to push for a referendum while they reevaluate their business models.

McDonald's and Chipotle know one thing is for certain, though -- they're going to raise prices and pass along the pain to the consumer. McDonald's hasn't yet indicated how big the price changes will be, but Chipotle warns of a pretty hefty hike:

Chipotle expects it will raise prices by a “mid-to-high single-digit” percentage in the state, but has not made a “final decision,” its Chief Financial Officer Jack Hartung told analysts on the company’s conference call Thursday.

Mind you this comes as fast food companies already increased prices by 13 percent in 2022 due to Bidenflation.

Californians already have to deal with the highest gas prices in the nation as well as the highest sales tax, and now soon a Happy Meal is going to make your wallet very unhappy indeed. Thanks, Gavin Newsom, and thanks, California legislature.