After Pizza Hut franchisees laid off more than 1,200 delivery drivers at California locations last month, it appears that more restaurants are following suit ahead of the state’s $20 minimum wage increase, according to a report by the Wall Street Journal.
Bay Area-based Vitality Bowls franchise owner Brian Hom, who owns two Vitality Bowls in San Jose, told the Wall Street Journal that his crew at the two locations had reduced from four to two employees, adding that he anticipated raising prices by 10% to alleviate labor cost. Hom also told the Wall Street Journal that any expansion plans would likely occur outside of California.
“We’ve taken significant measures to optimize profitability as increased costs have arisen,” a spokesperson for Vitality Bowls told SFGATE. “This includes menu innovations, tech stack advancements, and several other franchisee support programs. While the concerns extend up and down throughout California … the concerns of rising costs are nationwide and impact all restaurant brands and businesses in general. The rising minimum wage is one piece of costs going up.”
The Wall Street Journal also reported that some California fast food restaurant operators are curbing store hours or closing on slower parts of the day, but did not list which restaurant chains were doing so.
Leading up to the minimum wage increase on April 1 — which affects fast food chains with more than 60 locations nationwide — multiple California franchisees have issued layoffs or have plans to do so. Excalibur Pizza LLC, which owns multiple Round Table Pizza locations, is expected to lay off 70 delivery drivers on April 19 at franchise locations in Lincoln, Loomis, Elk Grove, Citrus Heights, Sacramento, Carmichael, Antelope, Galt and Woodland, according to a report by the Sacramento Business Journal.
“We anticipate third-party delivery providers in turn will see a boost in their businesses, which will require additional staff on their end,” a spokesperson for Round Table Pizza told the New York Post. “That said, delivery service fees may increase, and the customer will most likely see even higher prices as a result of this ongoing shift.”
Amid the expected minimum wage increase, Gov. Gavin Newsom faced an onslaught of criticism earlier this year after Bloomberg reported that Panera Bread was exempt from the state mandate due to a loophole that excluded restaurants that make bread in-house. The implication, per Bloomberg, was that Greg Flynn, a Bay Area billionaire and owner of two dozen Panera Bread franchises in California, was exempt due to his past Newsom campaign donations. Alex Stack, a spokesperson for Newsom, later called the Bloomberg report “absurd” and told the Los Angeles Times that Panera was not exempt.