Pizza Hut announces massive layoffs in California amidst fast-food minimum wage hike

In response to California’s Assembly Bill 1228, which raises the minimum wage for fast-food workers by $4 to $20 per hour, Pizza Hut has announced to lay off over 1,200 delivery drivers across Los Angeles, Orange, and Riverside counties in the coming year.

The legislation, championed by Assemblyman Chris Holden and signed into law by Governor Gavin Newsom in September, aims to improve the livelihoods of fast-food employees.

Facing the impending wage increase, Pizza Hut franchises are strategically shifting their focus to third-party delivery apps like DoorDash, GrubHub, and UberEats. Concurrently, Southern California Pizza Co., another Pizza Hut franchise, is planning to lay off 841 drivers, impacting various locations across Sacramento, Palm Springs, Los Angeles, Central California, Southern Oregon, and the Reno-Tahoe area.

Yum! Brands, the parent company of Pizza Hut, Taco Bell, and KFC, has not yet responded to requests for comments on the situation. Earlier, Yum! Brands emphasized that their franchisees operate independently in accordance with local regulations, while also hinting at potential challenges in navigating increased labor costs.

The ripple effect of the minimum wage hike extends beyond Pizza Hut, as other food chains like Chipotle and McDonald’s have signaled intentions to raise menu prices to offset the impact of higher wages in California.

Assemblyman Chris Holden, a proponent of AB 1228, stated that the pay increase will positively affect workers, enabling them to better support their families, maintain transportation, and enhance their overall quality of life. Additionally, the legislation establishes a Fast Food Council, aiming to address employer and community concerns while providing fast food workers with representation.

The Fast Food Council, comprised of nine voting members representing various stakeholders, will be responsible for developing standards related to wages, working conditions, and training for fast food workers. AB 1228 is expected to impact over 550,000 fast food workers and approximately 30,000 restaurants throughout the state, marking a significant shift in labor dynamics within the industry.