Pizza Hut under fire for laying off delivery drivers amid minimum wage increase


Salam Bustanji

Published December 27th, 2023 -

Pizza Hut’s delivery driver layoffs sparked outrage over minimum wage hike.

 (Brandon Bell/ AFP)

Highlights

Pizza Hut slashes 2,000 delivery jobs in California ahead of $20 minimum wage increase.


Pizza Hut, one of the largest pizza chains in the US, is facing criticism from its employees and customers after announcing that it will lay off all its delivery drivers in California, effective from February 16, 2024.

The move comes one month before a new law that will raise the minimum wage for fast food workers to $20 per hour goes into effect in the state.

According to Southern PacPizza, LLC, the company that operates Pizza Hut franchises in Central California, Southern Oregon and the Reno-Tahoe area, the decision to eliminate the delivery driver position was made to save costs and remain competitive in the market. The company said it will partner with DoorDash, a third-party delivery service, to fulfill its delivery orders.

However, the affected employees, who currently earn $15.50 per hour, are not satisfied with the company’s explanation. Marvin Lopez Rangel, a Pizza Hut delivery driver for almost five years, said he felt betrayed and disrespected by the company that he had been loyal to. He said he learned of the layoffs six days before Christmas, and was given an unemployment packet and no severance pay.

“They make billions of dollars easily in profits, and for them not to want to pay their workers a living wage and just to fire them across the board is really… disrespectful to say the least,” Lopez Rangel said.

Lopez Rangel also expressed concern for his fellow workers, especially those with families and children, who will lose their income and potentially their only source of livelihood. He said he hoped that Pizza Hut would reconsider its decision and put people before profits.

“I hope Pizza Hut sees this and comes to their senses and says, ‘Hey, you know what? We’re going to put people before the profits,’” he said.

The layoffs will affect about 2,000 delivery drivers in California, according to a spokesperson for Southern PacPizza, LLC. The company said it will offer some of the drivers the opportunity to work as in-store employees, but did not specify how many or what the pay rate would be.

The minimum wage increase for fast food workers in California was signed into law by Gov. Gavin Newsom in September 2023, as part of a broader effort to address income inequality and poverty in the state. The law will gradually raise the minimum wage from $14 to $20 per hour by 2026, starting with a $1 increase in April 2024. The law will apply to fast food establishments with 30 or more locations nationwide.


Supporters of the law argue that it will improve the living standards and working conditions of fast food workers, who are often subjected to low pay, long hours, and poor benefits. They also claim that it will boost the economy by increasing consumer spending and reducing reliance on public assistance.

Opponents of the law, however, contend that it will hurt small businesses and lead to higher prices, reduced hours, and job losses for fast food workers. They also warn that it will create a competitive disadvantage for California businesses, as other states have lower minimum wage rates.


Pizza Hut is not the only fast food chain that has faced backlash for its response to the minimum wage increase. In November 2023, McDonald’s announced that it will close 300 locations in California by the end of 2024, citing the impact of the wage hike on its profitability. The company said it will focus on expanding its digital and delivery capabilities, as well as remodeling its existing restaurants.

The minimum wage debate is likely to continue as more states and cities across the US consider raising their wage floors. According to the Economic Policy Institute, a progressive think tank, 32 states and the District of Columbia have minimum wage rates higher than the federal level of $7.25 per hour, as of January 2024. The highest state minimum wage is $16.69 per hour in Washington, followed by $16.32 per hour in California.