Business
Pizza Hut fires delivery drivers as minimum pay rises in California
By Jake Beardslee · December 29, 2023
In brief…
- Pizza Hut laying off 1,200+ drivers in California, adding fees
- McDonald's warned of price hikes in California
- DoorDash removing tipping prompts, raising fees in NYC
- Uber Eats said new rules are restricting delivery in NYC
- Employers responding to minimum wage hikes with job cuts and fees
With minimum wage increases going into effect in 22 states at the start of 2023, approximately 10 million low-wage workers will see their pay go up this year. However, some employers are responding to these mandated raises with job cuts and additional fees aimed at customers.
In California, where the minimum wage is increasing nearly 30% to $20 per hour, multiple Pizza Hut franchisees have announced plans to lay off over 1,200 delivery drivers across the state, according to notices filed with the state that were reported by Business Insider. One franchisee in Los Angeles has also begun tacking on an 8.5% service charge to customer bills, which they attribute to higher operating costs in California, reported the Los Angeles Times.
Fast food giant McDonald’s has similarly warned that menu prices will be rising in California to help offset higher labor expenses. According to CEO Chris Kempczinski, the pay increases will negatively impact franchisee cash flow in the short term.
On the opposite coast, New York City just implemented a new $17.96 per hour minimum wage for app-based food delivery workers. In response, DoorDash has removed tipping prompts during checkout and increased its service fee on all orders. They claimed New York’s “ill-conceived, extreme minimum pay rate” as the impetus for these changes, arguing it “will have significant consequences for everyone who uses our platform.”
Uber Eats also alerted customers that new regulations in New York City are altering how their delivery app operates, limiting work options for couriers there.