Pizza Hut franchises in California are laying off their staff delivery drivers in anticipation of a new state law raising the minimum wage to $20 per hour in 2024. The move will result in over 1,200 job cuts.
In regulatory filings, PacPizza in San Ramon, which operates Pizza Hut establishments throughout California, said it plans to “eliminate first-party delivery services” starting in February.
Simultaneously, Southern California Pizza Co., another Pizza Hut franchisee covering Orange County and the Inland Empire, announced plans to lay off about 841 salaried delivery drivers.
Under the new law, AB1228, approximately 557,000 fast-food workers at 30,000 restaurants in California will see their wages rise to $20 in April, with the potential for further increases up to 3.5% annually through 2029.
Customers at the affected Pizza Hut locations must use third-party apps like GrubHub, DoorDash and Uber Eats for deliveries.
Pizza Hut, owned by Yum! Brands, the parent company of KFC and Taco Bell, told Business Insider, which first reported news of the layoffs, that it is aware of the impending changes affecting some of its California franchise restaurants.
“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,” the company said in a statement.
The new law, a modified version of the FAST Act proposing a minimum wage increase for fast-food workers to $22 an hour this year, has faced resistance from major chains such as McDonald’s, Chipotle and Chick-fil-A. These chains said they plan to raise menu prices to offset higher operating costs.