Pizza Hut franchise operators in California are discontinuing in-house delivery services at numerous locations, leading to the layoffs of over 1,200 drivers, as revealed in federal employment notices analyzed by Business Insider.
The job cuts happening in February impact Pizza Hut delivery drivers all over California, such as in Sacramento, Palm Springs, and Los Angeles.
Pizza Hut Franchises Lay Off Workers in Response to Increased Wages
These layoffs are part of the Pizza Hut franchisees' response to a new law in the state that will raise fast-food workers' pay to $20 an hour starting in April 2024.
PacPizza, LLC, which runs Pizza Hut, decided to stop its delivery service, cutting all delivery driver jobs," the fast-food company notified the state's Employment Development Department under the federal WARN Act.
The Worker Adjustment and Retraining Notification Act demands that employers provide advance notice for large-scale layoffs or closures.
"It feels like the big guys are taking advantage of us," said Pizza Hut delivery driver Marvin Lopez Rangel, who learned of the employment losses before Christmas. Workers were told they would be laid off on February 16, 2024.
Local Pizza Hut drivers will be laid off next year. "They earn billions in profit, and just firing us instead of paying a fair wage is really disrespectful," Lopez-Rangel said.
Lopez Rangel, a five-year Pizza Hut employee, said the restaurant will save money using DoorDash drivers.
"They only care when they need us, but now, to save a few dollars, they're getting rid of us instead of paying a bit more," he said.
His manager sent him a letter with unemployment information explaining that the delivery driver position was being abolished due to a business decision.
"With the current economic strain, losing a job or facing pay cuts is the last thing we need, especially right before Christmas," said $15.50-per-hour Lopez-Rangel.
Other companies related to PacPizza, like Southern PacPizza LLC, CalPac Pizza LLC, and PacPartners LLC, also sent out similar notices.
Another Pizza Hut franchisee, Southern California Pizza Company, and its partners are ending their delivery services, laying off around 841 drivers, as stated in a December 1 WARN Act notice.
This company runs many stores in Orange, Los Angeles, Riverside, Ventura, and San Bernardino counties
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California Governor Increases Minimum Wage
California's Governor Gavin Newsom approved the FAST Recovery Act, a unique law that lets fast food workers influence their pay and work conditions, in September 2023. This law, signed on Labor Day, forms a 10-member council with fast food workers, franchise owners, employee advocates, and government representatives.
They will set wage standards, working hours, and worker health and safety. This policy applies to chains with over 100 outlets, like Starbucks and McDonald's. Newsom highlighted the need for better conditions for fast-food workers.
"I'm really proud of organized labor, especially on Labor Day, for helping workers get a voice and better conditions," said Newsom.
The National Restaurant Association and companies like McDonald's criticized the bill, saying it will be tough on small business owners, especially those with just one or two fast food franchises.
Sean Kennedy from the NRA stated that higher wages could increase costs for California's quick-service restaurants by $3 billion, affecting independent restaurants too.
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