California’s Minimum Wage Hike Leads to Fast Food Job Cuts


Fast food workers are losing their jobs in California as more restaurant businesses prepare to meet the new $20 minimum wage, which goes into effect next week.

According to a report in The Wall Street Journal, the majority of restaurants that make cuts are pizzerias. According to the article, multiple businesses intend to lay off hundreds of employees, reduce hours, and freeze hiring.

Democratic Gov. Gavin Newsom signed the Fast Act in September, requiring fast food companies with 60 or more sites nationally to match that wage hike after labor organizations lobbied for it alongside the healthcare industry, which will also see an increase in earnings in June.

“This is a big deal,” Newsom told union members in September. “That’s 80% of the workforce.”

Layoffs Started Last Year

Pizza Hut slashed more than 1,200 delivery workers in December, according to earlier USA TODAY reports. According to Fox Business, certain Pizza Hut franchises in California have also filed papers with the state stating that they will discontinue all delivery services.

“The franchisee is moving delivery services to a third party. “While it is unfortunate, we see this as a job transfer,” Pizza Hut told Fox. “As you know, many California restaurant operators are following the same approach due to rising operating costs.”

Round Table Pizza wants to lay off around 1,280 delivery drivers in the Golden State this year, while Excalibur Pizza plans to lay off 73 drivers and 21% of its personnel in April, according to a state filing acquired by The Wall Street Journal.

USA TODAY has contacted all pizza chains for comment.

No Exemptions, Newsom Insists

According to The National Law Review’s analysis of the measure, shops that “feature ice cream, coffee, boba tea, pretzels, or donuts” may qualify as a “fast food restaurant covered by the law.” The regulation could apply to similar establishments that sell sweets and beverages.

According to Bloomberg, Greg Flynn, who has a monopoly on Panera franchisees in California, attempted to avoid the state’s new mandate earlier this year, citing a loophole that businesses that make their bread are not required to increase employee wages.

Newsom’s administration termed the assertion “absurd,” telling the Los Angeles Times that the restaurant chain would not receive such an exemption.

Chipotle’s CFO told Yahoo Finance that the firm will be compelled to raise pricing to comply with the minimum wage increase. Starbucks told the source that it is assessing the implications of the Fast Act but did not say whether or not it would comply. It is uncertain whether the franchise will be considered a “fast food restaurant” under the new legislation.

Starbucks has committed to at least a 3% wage boost, which will take effect on January 1, according to a corporate statement.

According to USA TODAY, the coffee business recently closed seven outlets in California.

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