California food chains are laying off workers ahead of new minimum wage law

Some fast food locations in California are laying off workers ahead of a new $20 minimum wage law set to take effect in April that could significantly impact their bottom line.

Many restaurants, especially pizza chains, have begun cutting jobs, in an attempt to get ahead of the potential financial repercussions. The Wall Street Journal mentioned.

Michael Ojeda, 29, a Pizza Hut driver in Ontario, California, told the newspaper that he received a notice from a Pizza Hut franchisee Southern California Pizza in December informing him that his last day of work would be in February.

“Pizza Hut had been my career path for almost a decade, and without warning, it was cut,” Ojeda said.

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Last year, several California Pizza Hut branches filed notices to comply with the Worker Adjustment and Retraining Notification Act, saying they would discontinue their delivery services. Many of the services were delivery driver jobs.

In December, the Southern California pizza company announced it was laying off about 841 drivers across the state. The moves will impact Pizza Hut locations in Los Angeles and Orange, San Bernardino, Riverside and Ventura counties.

“When select California franchisees choose to make changes to their hiring approach, delivery will remain accessible via Pizza Hut's mobile app, website and phone ordering and customers' ordering experience will remain consistent,” a Pizza Hut spokesperson told FOX Business. on time.

Fox Business has reached out to the company.

Round Table Pizza, founded in Menlo Park, California, said it plans to lay off about 1,280 delivery drivers this year, the newspaper report said. Excalibur Pizza LLC said the employees laid off were delivery drivers, a statement to FOX Business from Round Table's parent company, FAT Brands, said.

“The franchisee is transferring its delivery services to a third party. Although it is unfortunate, we view this as a transfer of jobs,” the statement said. “As you know, many California restaurant operators are taking the same approach due to higher operating costs. We expect third-party delivery providers, in turn, will see a boost in their business, which will require additional staff on their part.”

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There is a DoorDash Inc delivery bag. On the floor at Chef Geoff restaurant in Washington, DC, US on Thursday, March 26, 2020. (Andrew Harrer/Bloomberg via Getty Images/Getty Images)

FAT Brands acknowledged that delivery fees may increase and customers may see higher prices as a result of the shift.

Brian Hom, owner of two Vitality Bowls restaurants in San Jose, said he runs his stores with two employees instead of the usual four. Understaffing means longer wait times for customers and higher prices to cover additional labor costs.

“I definitely won't be hiring anymore,” he told the newspaper.

The wage law applies to workers at fast food chains with 60 or more locations across the country.

Supporters say many fast-food workers are not teenagers working their first job, which is the image portrayed by opponents.

“Restaurants are struggling to stay above water, and Democrats have thrown an anvil at them,” California Assembly Republican Leader James Gallagher told Fox Business. “We warned Democrats that this new mandate would cost jobs. They ignored us, and here we are with the highest unemployment rate in the country about to get worse.”

California Governor Gavin Newsom and a longtime billionaire donor responded to a recent report that suggested the two mutually benefit from an exemption from the state's new $20 minimum wage regulation for the fast food industry that is expected to… (Getty Images/Getty Images)

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Chains exempt from the new law are those that prepare and bake bread on site to be sold as a standalone menu item. Panera Bread was initially exempt until allegations emerged that California Gov. Gavin Newsom pushed for the exemption on behalf of billionaire Greg Flynn, a longtime Newsom donor, who owns two dozen Panera locations across the state.

Newsom denied the allegations. In February, he said Panera would have to abide by the law.