Multiple Pizza Hut franchises in California, collectively operating hundreds of stores, are laying off 1,200 in-house delivery drivers ahead of a new law taking effect in April that raises wages to $20 per hour
PacPizza LLC, operating as Pizza Hut, said in a federal WARN (Worker Adjustment and Retraining Notification) Act notice filed with California’s Employment Development Department that the company has made a business decision to eliminate first-party delivery services and, as a result, the elimination of all delivery driver positions. Similarly, Southern California Pizza Co. has also announced layoffs, impacting about 841 drivers across the state.
The decision impacts Pizza Hut locations in Sacramento, Palm Springs, Los Angeles and other areas.
For the affected delivery drivers—some of which Newsweek has reached out to via social media channels—the change comes as a shock, with many expressing dismay over the severance offers and the timing of the layoffs.
The drivers, who now face the reality of unemployment in the coming year, have voiced concerns about the impact on their livelihoods and the broader implications for workers in similar positions.
One driver, who had been working for Pizza Hut for nine years, anonymously spoke to Business Insider and said that he was offered $400 severance if he stayed on staff until his February 5 layoff date.
The current minimum wage in California is $16 per hour and will increase to $20 in April. The move by the Pizza Hut operators is representative of broader adjustments within the fast-food industry in response to the new labor law, AB 1228, replacing the controversial FAST Act.
While the law aims to elevate the earnings of fast-food workers, it has sparked varied reactions from within the industry, prompting many restaurant operators outside of Pizza Hut to push for a referendum while they reevaluate their business models.
In the context of the Pizza Hut layoffs, the California franchises and its customers will rely on third-party delivery apps like Uber Eats, GrubHub and DoorDash for deliveries.
Newsweek has reached out to PacPizza LLC as well as Southern California Pizza Co. LLC via email for comment.
Pizza Hut, part of publicly traded company Yum! Brands, Inc., which owns brands like KFC and Taco Bell, acknowledged the recent changes in delivery services at some franchise restaurants, saying that its franchisees independently own and operate their establishments, and adhere to local market dynamics while complying with federal, state and local regulations.
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