California’s fast food workers are set to get a nice bump in pay in 2024. Starting in April, California’s FAST Act kicks in and raises the state’s minimum wage for fast food workers to $22 an hour. It’s got the industry up in arms, because, you know, paying people a living wage is world-ending stuff to them.
Everyone from McDonald’s to Chipotle is complaining about it, citing rising costs. Some, though, are taking things to the extreme. Business Insider reports that two large Pizza Hut franchises in California are eliminating over 1,000 delivery positions because of the new law.
The layoffs, which will be effective through February 2024, affect multiple Pizza Hut locations owned by PacPizza LLC and its franchise affiliates in Los Angeles, Palm Springs and Sacramento. The locations are eliminating their delivery positions just before the new law takes affect. The federally mandated WARN (Worker Adjustment and Retraining Notification Act) act sent out to workers poorly explained PacPizza’s reasoning.
PacPizza, LLC, operating as Pizza Hut, has made a business decision to eliminate first-party delivery services and, as a result, the elimination of all delivery driver positions.
A second Pizza Hut franchisee, Southern California Pizza Co. which operates locations in Riverside, San Bernardino, Ventura and Orange counties, eliminated delivery jobs as well. Between Southern California Pizza Co. and PacPizza, 1,200 delivery jobs were lost.
The situation is made worse by how the drivers who lost their jobs were treated by the franchises. One person who has been working as a delivery driver for nine years spoke anonymously with Insider about their severance.
A driver who spoke on condition of anonymity for fear of retaliation told BI that he was offered $400 severance pay if he stuck around through his February 5 layoff date. “The money they are giving us as severance pay is a slap on the face,” he said. “It comes to $3 a month for nine-plus years of service.
When reached for comment on the situation, none of the franchise responded. Yum Brands, which owns Pizza Hut, essentially said in a comment that franchises are on their own when it comes to stuff like this and free to operate how they see fit, but that they’re “aware of the recent changes to delivery services at certain franchise restaurants in California.”
Customers might get screwed as well. While it’s not known whether or not Pizza Hut plans to get rid of in-house delivery entirely in California, customers in the areas of the affected franchises will have to rely on third party apps like Grubhub and Doordash for delivery. This sucks because of the price difference these apps have on menu items: a large Pepperoni Lovers pizza before any taxes and fees is $21.59; the same pizza if ordered through Grubhub is $4.75 higher at $26.34.