Pizza Hut has announced a major change in its delivery services, complying with the Worker Adjustment and Retraining Notification Act. Notices filed by several Pizza Hut operators indicate the discontinuation of in-house delivery.
PacPizza, LLC, the operator of Pizza Hut, has decided to discontinue its delivery service, eliminating all delivery driver positions. The fast-food company officially informed the state's Employment Development Department following the federal WARN Act.
Instead, many franchises will now turn to third-party delivery apps such as Uber Eats, GrubHub, and DoorDash.
Lopez Rangel, who has been with Pizza Hut for five years, mentioned that the restaurant plans to cut costs by utilizing DoorDash drivers.
Pizza Hut Announces Major Delivery Change: Laying-off Delivery Drivers
A clash between delivery drivers and a higher minimum wage is forcing a significant change in Pizza Hut restaurants across California. Numerous franchises in the state are gearing up to let go of delivery drivers, a move prompted by Pizza Hut's preparation for an upcoming minimum wage increase.
Thousands of pizza delivery drivers are on the brink of job cuts in California, with two prominent Pizza Hut franchisees deciding to scrap their delivery services. The layoffs will impact around 1,200 workers across Orange, Los Angeles, Riverside, San Bernardino, and Ventura counties.
Additionally, reports suggest that over 800 workers at Pizza Hut establishments in Sacramento, Central California, Southern Oregon, and the Reno-Tahoe area will also be affected.
In another development, Southern California Pizza Co. revealed plans to lay off approximately 841 drivers statewide.
Operators point fingers at a recently enacted state law, effective in April, which raises the minimum wage for fast-food workers by $4 to $20 per hour.
Also Read: Nike to Lay Off Employees in Sweeping $2 Billion Cost-Cutting Effort
Concerns Arise as Wage Bill Criticized
California Governor Gavin Newsom gave the green light to the FAST Recovery Act in September 2023. This unique law empowered fast-food workers to influence their pay and work conditions.
Signed on Labor Day, the legislation establishes a 10-member council comprising fast-food workers, franchise owners, employee advocates, and government representatives.
This council's responsibility includes setting wage standards, working hours, and worker health and safety. The policy applies to significant chains with over 100 outlets, such as Starbucks and McDonald's.
Governor Newsom emphasized improving conditions for fast-food workers, expressing pride in organized labor for providing workers with a voice and better conditions, especially on Labor Day.
Meanwhile, the National Restaurant Association and businesses such as McDonald's criticized the bill, arguing that it could pose challenges for small business owners, especially those operating only one or two fast-food franchises.
Sean Kennedy of the NRA pointed out that elevated wages might lead to a $3 billion increase in costs for California's quick-service restaurants, impacting independent establishments as well.
Minimum Wage Hike Sparks Menu Price Dilemma at Pizza Hut
People are questioning the impact on fast-food menu prices as the minimum wage rises for hourly workers. Companies are getting creative to manage costs while keeping customers. The potential increase in simple menu items could hit consumers hard.
In a recent Chipotle earnings call, CFO Jack Hartung acknowledged that labor cost changes will affect their margins. He stated, 'We've been studying that... it's going to be a pretty significant increase to our labor.' While no firm decisions have been made, Hartung hinted at a mid to high single-digit price hike.
Related Article: New Year, New Pay: 22 States Set to Increase Minimum Wage for Nearly 10 Million Workers
