California food chains laying off workers ahead of new minimum wage law

Some California fast-food locations are letting go of workers ahead of a new $20 minimum wage law slated to take effect in April that could dramatically impact their bottom lines. 

Several eateries, particularly pizza chains, have begun to cut jobs, in an effort to get ahead of the possible financial repercussions, The Wall Street Journal reported. 

Michael Ojeda, 29, a Pizza Hut driver in Ontario, Calif., told the newspaper that he received a notice from Pizza Hut franchisee Southern California Pizza in December informing him that his last day of work would be in February.

“Pizza Hut was my career for nearly a decade and with little to no notice it was taken away,” said Ojeda.

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Last year, multiple Pizza Hut franchises in California filed notices to comply with the Worker Adjustment and Retraining Notification Act, saying they were discontinuing their delivery services. Many of the services were delivery driver jobs. 

In December, Southern California Pizza Co. announced layoffs of around 841 drivers across the state. The moves will impact Pizza Hut locations in Los Angeles, Orange, San Bernardino, Riverside and Ventura counties. 

“Where select California franchisees have elected to make changes to their staffing approach, access to delivery service will continue to be available via Pizza Hut’s mobile app, website and phone ordering and the customer ordering experience will remain consistent,” Pizza Hut spokesperson told FOX Business at the time. 

Fox Business has reached out to the company. 

Round Table Pizza, founded in Menlo Park, California, said it plans to lay off around 1,280 delivery drivers this year, the Journal report said. Excalibur Pizza LLC said the employees being laid off are delivery drivers, a statement to FOX Business from Round Table parent FAT Brands, said. 

“The franchisee is transferring their delivery services to third-party. While it is unfortunate, we look at this as a transfer of jobs,” the statement said. “As you know, many California restaurant operators are following the same approach due to rising operating costs. We anticipate third-party delivery providers in turn will see a boost in their businesses, which will require additional staff on their end.”

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FAT Brands acknowledged that delivery fees may increase and customers could see higher prices as a result of the shift. 

Brian Hom, owner of two Vitality Bowls restaurants in San Jose, said he runs his stores with two employees instead of the typical four. The staff shortage means longer wait times for customers and increased prices to cover the added labor costs. 

“I’m definitely not going to hire anymore,” he told the paper. 

The wage law applies to workers in fast food chains with 60 or more locations around the nation.

Supporters have said many workers in fast food restaurants are not teenagers working their first job, an image being portrayed by opponents, they said. 

“Restaurants are struggling to stay above water, and Democrats just threw them an anvil,” California Assembly Republican leader James Gallagher told FOX Business. “We warned Democrats this new mandate would cost jobs. They ignored us, and here we are with the highest unemployment rate in the country poised to get even worse.”

Chains exempted from the new law are those that prepare and bake bread on-site to be sold as a standalone menu item. Panera Bread was initially exempted until allegations surfaced that California Gov. Gavin Newsom pushed for the exemption to benefit billionaire Greg Flynn, a longtime Newsom donor, who owns two dozen Panera locations across the state. 

Newsom has denied the allegations. In February, he said Panera would have to comply with the law.