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Bay Area Fast Food Chains Grapple with Layoffs Amid Minimum Wage Hike

In the face of California's impending $20 minimum wage hike, fast-food chains in the Bay Area are navigating through layoffs and operational adjustments.

Layoffs and Adaptations

Following Pizza Hut's recent layoff of over 1,200 delivery drivers in California, more restaurants are trimming their workforce in anticipation of higher labor costs. Franchise owners are implementing various measures to enhance profitability amid escalating costs. These include menu innovations, technological advancements, and franchisee support programs. While challenges are felt across California and nationwide, the looming minimum wage hike is exacerbating concerns about rising operational expenses.

Reports suggest that some fast-food operators are adjusting store hours or closing during off-peak periods. However, specific chains undertaking these actions remain undisclosed.

Brian Hom, owner of two Vitality Bowls franchises in San Jose, disclosed downsizing from four to two employees at each location. He foresees a 10% price increase to offset rising labor expenses, hinting at potential expansion plans beyond California.

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Preparing for Change

With the April 1 minimum wage increase affecting fast-food chains nationwide, multiple California franchisees are also initiating or planning layoffs. Excalibur Pizza LLC, for instance, is expected to lay off 70 delivery drivers across various locations in April, as reported by the Sacramento Business Journal.

In addition, third-party delivery providers are expected to experience increased demand, necessitating additional staffing. Consequently, customers may encounter higher delivery service fees and menu prices due to the ongoing industry shift.

Political Context

Amidst these developments, Governor Gavin Newsom faced scrutiny earlier this year following reports of Panera Bread's exemption from the state mandate. Allegations of a loophole granting exemption to Bay Area billionaire Greg Flynn, a major Panera Bread franchise owner, fueled controversy. However, Newsom's spokesperson refuted these claims, dismissing them as "absurd."

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