Two Pizza Hut franchises in California announced the layoffs of more than 1,200 delivery workers in response to the imminent increase in the salary of fast food workers to US$20 per hour scheduled for the month of April. This measure, which seeks to anticipate the financial impact of the salary increase, is generating concern both among employees and in the community in general.
The companies involved are PacPizza, LLC, and Southern California Pizza Co., along with their affiliates, which operate Pizza Hut franchises in various California locations, including Sacramento, Palm Springs and Los Angeles. The layoffs will take place throughout February, coinciding with the anticipation of the new salary law.
The decision to eliminate Pizza Hut's in-house delivery services, leading to a significant staff reduction, is attributed to a business strategy to adapt to the changing labor cost landscape. This change is made in preparation for the increase of the state minimum wage to US$20 per hour.
Companies filed notices under the Worker Adjustment and Retraining Act (WARN), fulfilling the obligation to report mass layoffs. Among the companies that filed notices were PacPizza affiliates such as Southern PacPizza LLC, CalPac Pizza LLC and Pac Partners LLC. Additionally, Southern California Pizza Co. and its affiliates, operating under different names, are also ceasing in-house delivery services.
Employee and Consumer Perspectives in California
An anonymous delivery man told Business Insider their dissatisfaction with the compensation offered, describing it as insufficient for the years of service. There is a palpable sense of frustration among affected drivers, highlighting the human impact of these business decisions.
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Pizza Hut, owned by Yum! Brands acknowledged in a statement to the aforementioned media that it is aware of the changes in delivery services at certain franchises in California. The company emphasizes that franchisees operate independently, complying with regulations and seeking to provide quality service.
California's FAST Act, later replaced by AB 1228, sought to raise the minimum wage for fast food workers to $22 an hour in 2023. Industry resistance, led by chains and franchise advocacy groups, led to a compromise establishing a minimum wage of US$20 per hour under AB 1228. This new legislation impacts 557,000 fast food workers in 30,000 restaurants in California.
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