California Pizza Hut franchisees are bracing for the impact of the minimum wage increase, which will see fast-food workers earning $20 an hour by 2024. As a result, some franchisees are planning mass layoffs, affecting 1,200 workers in Orange, Los Angeles, Riverside, San Bernardino, and Ventura counties. An additional 800 workers at Pizza Hut locations in Sacramento, Central California, Southern Oregon, and the Reno-Tahoe area may also be affected.
The minimum wage legislation, AB 1228, signed into law by California Governor Gavin Newsom, will begin in April and gradually raise the minimum wage by $4. This increase in labor costs has prompted operators to reassess their workforce and make tough decisions to mitigate the impact. Yum! Brands, the parent company of Pizza Hut, as well as other fast-food chains, including KFC and Taco Bell, have not yet provided comment on the situation.
One significant change for Pizza Hut customers will be the elimination of in-house delivery options. Instead, customers will need to rely on third-party delivery apps such as DoorDash or UberEats. This shift is a direct response to the rising costs associated with the minimum wage increase.
Other fast-food industry leaders, such as McDonald’s and Chipotle, have also expressed concerns about the impact of the wage legislation on their operating costs. Chipotle’s CEO, Jack Hartung, stated that the change in the minimum wage would inevitably result in adjustments to menu pricing to cover the increased expenses.
While these decisions are not yet finalized, the minimum wage increase has undoubtedly forced franchisees and fast-food chains to evaluate their business models and consider potential measures to maintain profitability in the face of rising labor costs. As the market adapts to the new wage standards, it remains to be seen how these changes will ultimately affect both workers and consumers alike.