As April 2021 rapidly approaches with a new financial mandate involving an increase in hourly wages for fast-food workers in the Golden State, numerous eateries are examining their staffing situations. Workers scheduled to receive a pay rise to $20 per hour have ignited an austerity drive in several restaurant establishments, especially in pizza places.
The Wall Street Journal revealed plans by various California food outlets to conserve capital, resulting in fewer jobs based on confidential state data. Among those sitting in the eye of this developing storm are delivery drivers working for Pizza Hut and Round Table Pizza, a popular chain encompassing about 400 outlets, mainly across the West Coast.
These well-known pizza brands have placed approximately 1,280 of their delivery personnel on the chopping board, based on documents major employers are obliged to submit to the state pre-empting mass staff reductions. In advance of such significant changes, Pizza Hut has initiated the heartbreaking process by issuing departure notices to affected personnel.
Southern California Pizza, who control 224 Pizza Hut branches within the wider LA region, has already sent out its round of pink slips. Where workers once had a stable income, they’re now faced with the bitter reality of an assigned termination date, occurring before the impending pay rise materializes on April 1.
In an unfortunate twist of events, workers were given an exhausting choice to remain onboard until February with a severance package of $400, as in the case of Ojeda, or opt for unemployment. Despite making a decent wage through delivery tips, Ojeda chose the unemployment route, highlighting the challenging scenario these employees are grappling with.
A representative for Round Table Pizza offered further insight, disclosing that the layoffs are focused on the organization’s delivery drivers. However, they anticipate a surge in third-party delivery businesses, suggesting that these employees might find alternative job opportunities in those sectors.
“The ripple effect of these strategic changes prompts a probable climb in the cost of delivery service, which customers might bear the brunt of,” noted the brand official. Emphasizing the altering dynamics in the restaurant landscape, they concluded, “This statement reflects the harsh actuality applying to modern eateries.”
Meanwhile, in San Jose, Brian Hom, the proprietor of two locations of Vitality Bowls, has implemented a new strategy. To counter the upcoming labor cost surge, he is operating his Açaí bowl outlets with half the usual workforce. A financial necessity yet a decision that comes with its own set of consequences.
The transformation in the business model is inevitably affecting the customer experience. Consumers are experiencing extended wait times, along with a tangibly noticeable inflation in the cost of goods. The price of orders has reportedly risen by about 10% to offset the increased wage demands.
Beyond pizza and Açaí bowls, other heavyweights in the fast-food arena, like McDonald’s and Chipotle, are preparing for the wage hike’s arrival. Both chains have signaled intentions to up menu prices, matching the trend set by other California outlets following the Golden State’s minimum wage increase approval last fall.
Many establishments will have to grapple with what is, in some cases, a whopping 25% pay rise above the overall state minimum wage of $16. But it pays to have certain affiliations; not every brand will face this hurdle as per the recent legal measures.
Surprisingly, Panera Bread found itself exempt from the increased wages. This unexpected turn of events came after a hefty campaign donation from the owner of a group of the bakery-café chains to the state Governor, elicifying more than just raised eyebrows.
The $20-an-hour minimum wage hike, a provision under the Fast Food Accountability and Standards Recovery Act (FAST Act), made provisions for chains offering standalone baked goods for sale, like Panera Bread. This legal loophole thus allows Panera to steer clear of the wage escalations.
Beneficiaries of this unusual provision include Greg Flynn, the billionaire CEO of Flynn Restaurant Group, which controls several Panera Bread sites within California. With ties to the governor and a history of business ventures together, the exclusion represents an interesting twist in this economic narrative.
Indeed, Governor Gavin Newsom, a Democrat, signed the law abolishing the previous $16 minimum wage last September. Now, amidst growing controversy and despite financial ties to the governor, Flynn has underscored the pragmatism of this exemption for some successful establishments.
California’s $20 Minimum Wage Stirs Staff Reduction at Pizza Places appeared first on Real News Now.
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