Business owners in California, particularly fast food restaurants, are not happy with the new minimum wage law that is to take effect on April 1, 2024. The minimum wage per hour will go from $16 to $20.
This increase is not looking good for the business owners and they might have to let a lot of their workers go. Several fast-food restaurants have started to lay off workers and more will still join.
A New Mandate
In September 2023, California Governor Gavin Newsom signed into law a new mandate that increased the minimum wage per hour of about 500,000 California fast-food workers from $16 to $20.
This new law has met business owners as a shock, we’re talking about a 25% increase from the usual $16 that took effect on January 1. This will surely impact these businesses and employers are now acting fast.
A Raise In Minimum Wage Will Lead To Job Cuts
This approach by Californian Governor Gavin Newsom was created to make life easier for those 500,000 fast-food workers. This innovation is a new benchmark for fast-food workers and it will help with the ever-rising cost of living.
Despite the good intentions the California government had for increasing the minimum wage, it seems the unexpected is about to happen. Fast-food restaurants are laying people off to get ahead of the financial implications of having to increase pay.
Pizza Chains Are At The Front Line
Out of all the fast-food chains that are laying people off, reports have shown that pizza business owners are on the frontline. This interview with one of Pizza Hut’s employees shed more light on the issue.
Micheal Ojeda, a 29-year-old Pizza Hut driver in Ontario, California, told the newspaper that his company had already given him notice to quit. Ojeda added how sad it was for his only means of survival to be taken away just like that.
Several Other Pizza Franchises Also Filed Notice
Just like Pizza Hut in Ontario, several other Pizza Hut franchises in California have also filed notice to discontinue most of their delivery services. They added that this was in a bid to comply with the Adjustment and Retraining Notification Act.
Also in December 2023, the Southern California Pizza Co. announced that they’d be laying off at least 841 drivers across states like Los Angeles, Orange, San Bernardino, Riverside, and Ventura counties.
Access To Delivery Will Be Available On Mobile Apps
During an interview with Fox Business, a Pizza Hut spokesperson at the time of the interview mentioned that although they are making some changes to their staffing system, some things will not change.
And yes, laying off delivery drivers does not mean that their lovely customers will stop getting a taste of their favorite pizza, they assured that their mobile app, website, and other ordering services will remain available.
Round Table Pizza Is Also Planning To Lay Off A Thousand Plus Employees
Another popular pizza restaurant, Round Table Pizza has announced that they’d also be laying off quite a large number of their employees.
The company explained that they’d be letting go of at least 1,280 delivery drivers in 2024. This looks like the approach all fast food restaurants are adopting to cut down their loss.
Even Excalibur Pizza Is Taking The Same Approach
Yes! Another pizza business has decided to let go of its employees to get ahead of the financial implications of the minimum wage increase. They also added that most of the employees being laid off are drivers.
Excalibur Pizza has also said that, in addition to laying off drivers, they have also transferred their delivery services to a third party.
Transfer Of Delivery Business To Third Party Companies
Almost all Californian businesses have decided to let go of their delivery drivers. The good thing is that most of them have now decided to hand over their delivery services to third parties.
This might become beneficial for both delivery companies and drivers. The third-party delivery companies will get a boost in business and they’ll need to hire more staff.
Delivery Fees Might Go Up
During an interview with FOX Business RoundTable parent FAT Brand said that this approach might cause delivery fees to increase and customers might now have to pay more for their services.
As long as powers have changed hands, customers will have no choice but to take part in sharing the cost.
Business Dynamics Will Change
Conversation with a small business owner has shown that this might be difficult for small businesses. And to be able to get by they need to alter their business plan.
Brian Hom, who owns two small Vitality Bowls restaurants in San Jose has talked about how he had to let go of two of his staff and now runs the stores with just two employees. Now, the shortage of staff means an additional wait time for customers and prices will also increase.
Fast Food Employees Are Not Teenagers
Supporters of the law believe that an increase in the minimum wage of California employees is the best way to go. Most of these workers are not teenagers, they are actual adults who have families to cater for.
Subjecting them to measly wages is not in any way helping them. To them, this fresh standard will positively impact the lives of workers nationwide.
A Law Like This Will Cost People Their Jobs
The Republicans have been trying to convince the Democrats that this particular reform will cost people their jobs. California Assembly Republican leader James Gallagher told Fox Business that most of these restaurants are struggling to get above water.
James tried to warn the government against this new mandate, now unemployment in the country will become even worse.
Bakeries Are Exempted From The New Law
Not all food businesses will be affected by the new law. Businesses that prepare and bake bread as a standalone menu item will not need to worry about the increase.
This decision was criticized by those who believed that Gov. Gavin pushed for this exemption to benefit billionaire Greg Flynn who owns at least two dozen Panera bakery shops across the state. The gov has however denied all allegations and Panera will also have to comply with the new law.
