1200 Pizza Hut delivery drivers losing jobs due to CA minimum wage increase

[mike]

https://www.businessinsider.com/califor ... aw-2023-12

In April, California fast-food workers are set to get a nearly 30% pay bump to $20 an hour.
Fast-food chains such as Chipotle say they'll raise prices to offset the state's higher labor costs.
Two Pizza Hut franchisees are laying off more than 1,200 delivery drivers in California.

Two Pizza Hut operators in California are eliminating their in-house delivery services at hundreds of stores, resulting in more than 1,200 driver layoffs, according to federal-employment notices reviewed by Business Insider.

The layoffs, effective throughout February, affect Pizza Hut delivery drivers across California, including at Sacramento, Palm Springs, and Los Angeles locations. The Pizza Hut franchisees are reducing staff as fast-food chains in the state brace for a new law that increases worker pay to $20 an hour in April.

"PacPizza, LLC, operating as Pizza Hut, has made a business decision to eliminate first-party delivery services and, as a result, the elimination of all delivery driver positions," a federal WARN Act notice filed by the fast-food operator with the state's Employment Development Department said.

The Worker Adjustment and Retraining Notification Act requires employers to give notice of plant closures or mass layoffs.

Other PacPizza affiliates filing notices included Southern PacPizza LLC, CalPac Pizza LLC, and Pac Partners LLC.

A second Pizza Hut franchisee, Southern California Pizza Co., and its affiliates are also discontinuing its in-house delivery services and laying off about 841 drivers, according to a WARN Act notice from December 1.

The company operates dozens of stores in Orange, Los Angeles, Riverside, Ventura, and San Bernardino counties.

It is amazing to me what people pay for delivery of already-expensive fast food. It's interesting that these Pizza Huts felt they couldn't raise delivery prices enough to compensate for the wage increase. My guess is they are giving up on making delivery service profitable in light of the third party delivery services that already exist. Let Doordash and Uber Eats figure out how to make fast food delivery pay. So instead of making a steady hourly wage working for the restaurant, drivers can now sit around waiting for delivery jobs to come in from the apps.

[Josh]

More interestingly, other pizza places continue to have delivery.

I don’t see how $20/hr really works for a typical driver either. It costs more than that to keep a car maintained and fuelled.

[steve-in-kville]

I don’t see how $20/hr really works for a typical driver either. It costs more than that to keep a car maintained and fuelled.

I wondered that myself. I know people that do food delivery and some also do Uber. I'm told it is a nice side hustle but they wouldn't want to do it full time.

[mike]

More interestingly, other pizza places continue to have delivery.

I don’t see how $20/hr really works for a typical driver either. It costs more than that to keep a car maintained and fuelled.

I assume this was newsworthy as a possible bellwether for how the upcoming minimum wage may affect fast food businesses.

From what I gathered through a quick online search, Pizza Huts generally pay so much a mile for vehicle usage. Plus drivers get tips.

[mike]

I don’t see how $20/hr really works for a typical driver either. It costs more than that to keep a car maintained and fuelled.

I wondered that myself. I know people that do food delivery and some also do Uber. I'm told it is a nice side hustle but they wouldn't want to do it full time.

I have an uncle who does Uber eats sometimes, he's mostly retired and does it sometimes for something to keep busy. My brother in law did Uber for awhile in his spare time. He didn't really need the money, I suspect he did it for fun.

[barnhart]

I see a general trend of returning to pre-industrial models of labor where the value has no floor except the lowest or most desperate worker. The industrial model went through a violent stage and eventually produced ideas like overtime, minimum wage and living wage which are keyed to the idea that human dignity demands the value of labor be set high enough to live, not allowed to collapse to the levels of the most desperate. I fear we are returning to previous ideas like the Iron Law of Labor with an hyper individualist app based economy.

[mike]

I see a general trend of returning to pre-industrial models of labor where the value has no floor except the lowest or most desperate worker. The industrial model went through a violent stage and eventually produced ideas like overtime, minimum wage and living wage which are keyed to the idea that human dignity demands the value of labor be set high enough to live, not allowed to collapse to the levels of the most desperate. I fear we are returning to previous ideas like the Iron Law of Labor with an hyper individualist app based economy.

I don't really see it. It looks like the opposite of this to me in cases like CA raising the minimum wage. But consumers can't be forced to buy things, and companies can't be forced to stay in business. So as long as there is at least a certain level of economic freedom, raising the minimum wage will just cause shifts like the one in this article, where companies just stop offering services that aren't profitable.

If we're going to control the wages of hourly positions because the market isn't enough to make businesses pay a reasonable wage, and businesses eliminate then eliminate those jobs because they become unprofitable, what else do we expect will happen?

An app based economy brings many efficiencies depending on how you look at it. People get to work the hours they want and pick the jobs and tasks they want. Yes, it is potentially less secure than a steady hourly wage, but it also has upside potential.

Supply and demand affects app-based delivery jobs, the competition among services and drivers help keep the costs reasonable for consumers. You can't force people to buy delivery for pizza, you have to make it attractive to them. Businesses must manage their costs in order to attract consumers. Employees or self-employed workers must also manage their costs in order to attract employers, jobs, and tasks. As long as consumers are free to make economic choices, what the state mandates in terms of wages will only do so much in preserving jobs and reasonable wages.

[Josh]

I see a general trend of returning to pre-industrial models of labor where the value has no floor except the lowest or most desperate worker. The industrial model went through a violent stage and eventually produced ideas like overtime, minimum wage and living wage which are keyed to the idea that human dignity demands the value of labor be set high enough to live, not allowed to collapse to the levels of the most desperate. I fear we are returning to previous ideas like the Iron Law of Labor with an hyper individualist app based economy.

Of particular note, “apps” like DoorDash might charge the customer $6.00 for food delivery, but only $2.00 is given to the driver. It is hard to imagine that some app is really worth twice as much as the person who actually has to accept making a delivery regardless of distance, etc. for $2. But here we are.

These companies have also formed a cartel which agitates against any legislative movement to require normal employee protections for drivers, instead (falsely) claiming they are “contractors”. NY State finally put a stop to this and requires minimum wage for drivers. But in California, Uber / Lyft et al spent hundreds of millions of dollars to avoid paying a fair wage:

The largest donors for Proposition 22 are the ride-hailing companies: Uber with $52 million and Lyft, $49 million. Delivery companies have also kicked in big: DoorDash has spent $48 million and Instacart, $28 million.

[mike]

I see a general trend of returning to pre-industrial models of labor where the value has no floor except the lowest or most desperate worker. The industrial model went through a violent stage and eventually produced ideas like overtime, minimum wage and living wage which are keyed to the idea that human dignity demands the value of labor be set high enough to live, not allowed to collapse to the levels of the most desperate. I fear we are returning to previous ideas like the Iron Law of Labor with an hyper individualist app based economy.

Of particular note, “apps” like DoorDash might charge the customer $6.00 for food delivery, but only $2.00 is given to the driver. It is hard to imagine that some app is really worth twice as much as the person who actually has to accept making a delivery regardless of distance, etc. for $2. But here we are.

These companies have also formed a cartel which agitates against any legislative movement to require normal employee protections for drivers, instead (falsely) claiming they are “contractors”. NY State finally put a stop to this and requires minimum wage for drivers. But in California, Uber / Lyft et al spent hundreds of millions of dollars to avoid paying a fair wage:

The largest donors for Proposition 22 are the ride-hailing companies: Uber with $52 million and Lyft, $49 million. Delivery companies have also kicked in big: DoorDash has spent $48 million and Instacart, $28 million.

All of which, if true, results in really expensive delivery cost on top of the expensive price of the food. It is amazing the luxuries our society can afford.

[Ken]

I see a general trend of returning to pre-industrial models of labor where the value has no floor except the lowest or most desperate worker. The industrial model went through a violent stage and eventually produced ideas like overtime, minimum wage and living wage which are keyed to the idea that human dignity demands the value of labor be set high enough to live, not allowed to collapse to the levels of the most desperate. I fear we are returning to previous ideas like the Iron Law of Labor with an hyper individualist app based economy.

Of particular note, “apps” like DoorDash might charge the customer $6.00 for food delivery, but only $2.00 is given to the driver. It is hard to imagine that some app is really worth twice as much as the person who actually has to accept making a delivery regardless of distance, etc. for $2. But here we are.

These companies have also formed a cartel which agitates against any legislative movement to require normal employee protections for drivers, instead (falsely) claiming they are “contractors”. NY State finally put a stop to this and requires minimum wage for drivers. But in California, Uber / Lyft et al spent hundreds of millions of dollars to avoid paying a fair wage:

The largest donors for Proposition 22 are the ride-hailing companies: Uber with $52 million and Lyft, $49 million. Delivery companies have also kicked in big: DoorDash has spent $48 million and Instacart, $28 million.

All of which, if true, results in really expensive delivery cost on top of the expensive price of the food. It is amazing the luxuries our society can afford.

I wonder to what extent this sort of decision by Pizza Hut is due to the rising minimum wage and to what extent it is due to competition from DoorDash and UberEats.

Pizza Hut isn't operating in a vacuum. In any given city they are also competing with a long list of other Pizza delivery places that use UberEats and DoorDash. And it is probably cheaper and easier for them to just go with the flow and let those other delivery services handle their deliveries.

Josh is right about those delivery companies spending hundreds of millions to fight regulation. This trend was party amplified by the pandemic. And also party by American's seeming inability to actually cook for themselves at home.

Speaking to my daughters I am frankly shocked at how many of her friend's families don't really ever cook food. They just get takeout and microwaveable food for virtually every meal. And these aren't necessarily affluent families. They just have the habit of getting takeout all the time. We are the weird ones who cook all our meals and her friends like to come over because they get "real food". Weird.

Also it is disconcerting to go out to eat these days and have to navigate a queue of delivery drivers standing around the entrance and cash register of most restaurants waiting on orders. You almost have to fight your way to the front of the line just to get to the cashier and get a table. The restaurant might be half empty but there are a half dozen delivery drivers standing around in the lobby waiting on deliveries.

I don't like it but I guess it is what some restaurants need to do to survive. It is a tough business to be in and I have admiration to anyone who can successfully run a restaurant.

The other weird trend I don't like is the drive-through dominant restaurants. The Chick-fil-A restaurants are like that around here and the Panda Express restaurants are going that way. The whole restaurant is designed around drive-through with dual lanes and all the staff focused on keeping the drive through line moving fast. And you have to dodge a gauntlet of cars to even get inside and then serving you in person is almost an afterthought since the entire operation is geared around drive-through. And when you do get inside the door there is the same gauntlet of delivery drivers to navigate. People just wanting to sit down and dine in on fresh hot food that hasn't been sitting in a bag for 20 min are the weird minority.