California restaurants are reportedly laying off staff and reducing hours for other team members in an effort to cut costs ahead of a California state law taking effect on April 1 that will raise fast-food workers’ hourly wage to $20.
In the months leading up to the wage mandate, California eateries, particularly pizza joints, have established a plan to cut jobs, according to state records obtained by The Wall Street Journal.
Pizza Hut and Round Table Pizza — a Menlo Park, Calif.-founded chain of 400 pizza parlors, mostly on the West Coast — have said they plan to lay off around 1,280 delivery drivers this year, according to records that major employers must submit to the state before large layoffs, The Journal reported.
Pizza Hut already sent notices to employees informing them of their last day.
Michael Ojeda, a Pizza Hut driver for eight years in Ontario, Calif., received one of the notes from Pizza Hut franchisee Southern California Pizza in December telling him that his last day of work would be in February.
Southern California Pizza — which operates 224 Pizza Huts in the greater Los Angeles area — offered $400 in severance if Ojeda stayed through February, according to The Journal.
But Ojeda, who told the outlet that he made hundreds of dollars a week in wages and tips as a delivery driver, decided to claim unemployment instead.
“Pizza Hut was my career for nearly a decade and with little to no notice it was taken away,” said 29-year-old Ojeda, who was supporting his mother and partner on his Pizza Hut delivery wages.
Representatives for Pizza Hut did not immediately respond to The Post’s request for comment.
A spokesperson for Round Table Pizza confirmed to The Post that the individuals being laid off are delivery drivers.
“We anticipate third-party delivery providers in turn will see a boost in their businesses, which will require additional staff on their end. That said, delivery service fees may increase, and the customer will most likely see even higher prices as a result of this ongoing shift,” the company rep added. “This is the reality of today’s restaurants.”
In San Jose, Calif., Brian Hom, the owner of two locations of Vitality Bowls, has dealt with impending increased labor costs by running his Açaí bowl joints with two employees instead of his typical four, according to The Journal.
As a result, it takes longer for customers to receive their order, which has also increased in price by around 10% to offset higher wages.
“I’m definitely not going to hire anymore,” he added, per The Journal.
Other popular chains like McDonald’s and Chipotle have also said that they will be lifting menu prices in California to pay for the minimum wage hikes the Golden State passed in September.
At some fast-food locations, the April 1 minimum-wage increase for California fast-food workers represents as much as a 25% increase from the state’s broader $16 minimum wage.
Panera Bread, however, was ruled exempt from the $20-an-hour minimum wage hike by Gov. Gavin Newsom after the billionaire owner of several of the chain’s locations donated to his campaign, according to a report.
Newsom reportedly sought the exemption via the Fast Food Accountability and Standards Recovery Act (FAST Act), which includes an unusual carve-out that excuses “chains that bake bread and sell it as a standalone item.”
Panera’s exclusion from the labor cost increases benefits, among others, Greg Flynn, the billionaire CEO of Flynn Restaurant Group, the company that owns some two dozen Panera Bread locations in the state.
Flynn, who attended the same high school as Newsom, has been involved in business dealings with the California governor, and has also contributed to Newsom’s political campaigns.
