California faces a significant shift in Pizza Hut's operations as the company prepares to lay off over 1,200 delivery drivers in Los Angeles, Orange, and Riverside counties by the end of February.
The move precedes the imminent increase in California's minimum wage by $4, set to elevate fast-food workers' pay by nearly 30% from $16 to $20 per hour in April, as per USA Today.
California Fast Food Chains Adapt to Layoffs, Delivery Shifts
The layoffs align with the introduction of Assembly Bill 1228, spearheaded by Assemblyman Chris Holden and endorsed by Governor Gavin Newsom in September. The legislation has prompted Pizza Hut franchises, including Southern California Pizza Co., to reevaluate their delivery strategies. These franchises are looking to shift towards third-party delivery apps like DoorDash, GrubHub, and UberEats to streamline pizza and food deliveries.
Yum! Brands, the multinational corporation that owns popular fast food chains including Pizza Hut, Taco Bell, and KFC, has refrained from providing any official statement regarding the current situation. Yum! Brands, in a recent statement to Business Insider, highlighted the value of its franchisees' independence, underscoring their commitment to following local regulations and delivering exceptional service.
Notably, Southern California Pizza Co. is also set to lay off 841 drivers across various locations, impacting areas such as Sacramento, Palm Springs, Los Angeles, Central California, Southern Oregon, and the Reno-Tahoe region.
In response to the impending minimum wage increase, other fast-food chains like Chipotle and McDonald's have indicated plans to raise menu prices to offset the higher labor costs in California, according to CBS News.
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US Wage Hike
Assemblyman Holden, the driving force behind AB 1228, has expressed optimism regarding the potential benefits of the pay increase for workers' livelihoods. Legislation has been introduced to not only increase the minimum wage but also create a Fast Food Council.
This council will consist of various stakeholders including industry representatives, franchisees, employees, advocates, and public members. The council is tasked with the development of standards for fast-food workers, encompassing areas such as wages, working conditions, and training.
AB 1228, a new legislation, is projected to have a significant impact on the fast-food industry in California. According to estimates, more than 550,000 fast-food workers and approximately 30,000 restaurants are expected to be affected by this bill.
Pizza Hut, operating under the name PacPizza LLC, has recently submitted a WARN Act notice to the California Employment Development Department. The notice states that the company has made the decision to discontinue its first-party delivery services, which will result in the elimination of all delivery driver positions.
The franchises have decided to align themselves with the changing landscape by relying on third-party delivery apps to meet the increasing demands of their customers. In response to the increasing cost of living, California has implemented an increased minimum wage, demonstrating the state's dedication to ensuring fast-food workers receive a more sustainable income.
The state's Pizza Hut franchises are prepared to navigate these changes, ensuring compliance with regulations and delivering quality service through alternative means, Fox 11 reported.
