California Food Chains Lay Off Workers, Raise Prices Ahead of April Minimum Wage Hike

(Photo by Tim Boyle/Getty Images)

OAN’s Brooke Mallory
5:57 PM – Tuesday, March 26, 2024

In anticipation of a new $20 minimum wage law that will have a significant negative impact on food brands’ bottom lines when it goes into effect in April, a slew of fast-food restaurants in California are now beginning to fire employees and raise prices.


According to The Wall Street Journal, fast food restaurants, particularly pizza chains, and even higher-end food establishments have started to reduce staff in an effort to prepare for potential financial consequences.

Pizza Hut driver Michael Ojeda, 29, of Ontario, California, told the press that he was notified in December by Pizza Hut franchisee Southern California Pizza that his last day of employment would be at the end of February.

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

A handful of California-based Pizza Hut locations also announced last year that they were ending their delivery services in order to comply with the Worker Adjustment and Retraining Notification Act.

Southern California Pizza Co. said in December that it was laying off about 841 drivers statewide. Pizza Hut outlets in Los Angeles, Orange, San Bernardino, Riverside, and Ventura counties will be impacted most by the changes, sources say.

“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,” a Pizza Hut spokesperson told the press.

According to a Journal article, Menlo Park, California-based Round Table Pizza said that it will be firing at least 73 delivery drivers this year as well. Excalibur Pizza LLC similarly stated that the majority of the workers being let go from its business are also delivery drivers.

“The franchisee is transferring their delivery services to a 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.”

Fat Brands Inc., another large company that owns restaurants like Johnny Rockets, Hot Dog On A Stick, Fatburger, and Round Table Pizza, stated that the change may result in much higher delivery costs and higher prices for customers in general.

Brian Hom, who owns two Vitality Bowls restaurants in San Jose, California, said that he staffs his establishments with just two people rather than the customary four. Customers will now have to wait longer for service due to a staffing shortfall, and prices will rise to offset the higher labor expenses.

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

Employees of fast food franchises with 60 or more locations around the U.S. are affected by the Newsom-approved wage law.

Additionally, contrary to what critics claim, many fast food business employees are not just teenagers who are working their first jobs. Many of them are hard-working mothers and fathers who have mouths to feed, so being fired from a job due to a statewide minimum wage hike is not ideal in any circumstance.

“Restaurants are struggling to stay above water, and Democrats just threw them an anvil,” said California Assembly Republican official James Gallagher. “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 that bake and prepare bread in-house to sell as a stand-alone menu item are excluded from the new regulation.  

“California is home to more than 500,000 fast-food workers who, for decades, have been fighting for higher wages and better working conditions. Today, we take one step closer to fairer wages, safer and healthier working conditions, and better training by giving hardworking fast-food workers a stronger voice and seat at the table,” Governor Gavin Newsom (D-Calif.) said.

However, Newsom failed to explain that a good portion of these employees would be cut from the work force and that prices would begin to climb higher and higher, putting many companies out of business.

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