- The minimum wage for fast food in California will increase to $20 per hour on April 1
- Thousands of Pizza Hut and Round Table delivery workers will be laid off
- Restaurants are also automating cooking to reduce kitchen staff
Fast food workers in California are losing their jobs as employers cut costs ahead of a minimum wage increase that takes effect on Monday.
A law signed by Governor Gavin Newsom last year will raise the minimum wage for fast food workers to $20 an hour at chains with more than 60 locations across the US.
That’s 25 percent more than California’s recently increased standard minimum wage of $16 per hour.
Major players, especially pizza restaurants, have said they will cut staff and hours to prepare for the financial fallout The Wall Street Journal reported this this week.
Chains such as Pizza Hut and Round Table have laid off thousands of delivery workers.
California Governor Gavin Newsom signs the fast food bill surrounded by fast food workers at SEIU Local 721 in Los Angeles on September 28, 2023
More than 1,200 Pizza Hut delivery workers will lose their jobs in California after the state implements a new $20 minimum wage for fast food workers
Michael Ojeda, 29, a Pizza Hut driver in Ontario, California, told the Journal that he received a message in December from Pizza Hut franchisee Southern California Pizza informing him that his last day would be in February.
“Pizza Hut was my career for almost a decade and was taken from me with little to no notice,” he said.
In December, two major California Pizza Hut franchises – both Southern California Pizza and PacPizza – announced they would lay off more than 1,200 drivers. Instead, they said they would rely solely on third-party apps like DoorDash and UberEats.
Round Table Pizza, a chain with about 400 locations, says it will lay off about 1,280 delivery workers this year, according to state data. Excalibur Pizza, one of its franchisees, plans to cut 73 driver jobs next month – 20 percent of its workforce.
And McDonald’s, Chipotle, Jack in the Box and other chains have said they would raise menu prices to offset some of the higher costs.
Other restaurants have said they would look for new ways to reduce restaurant staffing levels.
California-based El Pollo Loco recently told investors it was automating some of its salsa production to ease wage increases. According to the report, Jack in the Box is testing frying robots and automated drink dispensers.
Round Table Pizza, a chain with about 400 locations, says it will lay off about 1,280 delivery workers this year
“California restaurants in the quick-service sector are bracing for the fast-food wage increase and the difficult scheduling, staffing and pricing decisions they face,” the California Restaurant Association said in a statement.
‘We are already seeing cost pressures permeating the restaurant sector and even beyond.
“Unfortunately, these challenges exacerbate the already fragile business environment for small businesses, forcing entrepreneurs – at all levels – to make decisions that hinder opportunities for job growth.”
Monday’s wage increase comes after a long battle between Governor Newsom and fast food chains in California over wages.
In 2022, Newsom signed the FAST Act into law, which called for a $22 per hour minimum wage for fast food workers starting in 2023.
But a coalition of restaurant industry organizations pushed back, warning it could increase costs for restaurants by $3 billion.
Last year, a new law – AB1228 – replaced the FAST Act and lowered the wage to $20. It is expected that 557,000 fast food workers and 30,000 restaurants in California will be affected.