Ahead of statewide minimum wage increases for fast-food workers, hundreds of California Pizza Hut franchises announced cuts in their delivery services, laying off more than 1,100 drivers, according to federal and state filings.
The Pizza Hut locations, run by two different franchise operators, reported the change to their business models for restaurants from Orange to Stanislaus counties, according to Worker Adjustment and Retraining Notifications filed to the California Employment Development Department.
The layoffs of more than 1,100 delivery drivers are expected to go into effect as soon as February, just weeks before the state’s $20 minimum wage for fast-food workers is set to go into effect.
The pay increase is the result of Assembly Bill 1228, which applies to California workers employed by any fast-food chain that has more than 60 locations in the United States. California’s minimum wage is currently $15.50 for all workers. Statewide, the increase is estimated to affect more than 500,000 workers. The legislation also created a council of representatives of workers and employers to partner with state agencies to recommend minimum standards for work hours and other working conditions. Restaurant owners opposed the legislation, arguing they couldn’t bear the increased costs without raising prices for their customers.
It wasn’t immediately clear if the new wage requirements were a factor in the move, but the notifications said the companies “made a business decision to eliminate first party delivery services and as a result the elimination of all delivery driver positions.”
Officials with the two Pizza Hut operators, PacPizza affiliates and Southern California Pizza Company, did not immediately respond to questions from The Times. The PacPizza operators include Southern PacPizza, CalPac Pizza II and Cal PacPizza.
The restaurants affected include those in Los Angeles, Riverside, San Bernardino, Sacramento, Tulare and Kern, among others.
The parent company of Pizza Hut, in a statement to Business Insider, said it was “aware of the recent changes to delivery services at certain franchise restaurants in California.”
“Our franchisees independently own and operate their restaurants in accordance with local market dynamics and comply with all federal, state, and local regulations while continuing to provide quality service and food to our customers via carryout and delivery,” according to the statement.
