Pizza Hut franchises in California lay off all delivery drivers ahead of $20 minimum wage increase
Pizza Hut franchises in California lay off all delivery drivers ahead of $20 minimum wage increase

Pizza Hut franchises in California lay off all delivery drivers ahead of minimum wage increase

Pizza Hut made over $6 billion last year, you’d think they could afford to pay their drivers.
Of course the can pay their drivers but think of the poor shareholders who may see 0.1% less profit or the CEO who may get only 99% of their usual bonus. Oh the horror!!
The Pizza Hut corporation will be fine. These are franchises we are talking about. The franchises pay an initial fee of $25k and then 6% + 4.75% sales/marketing fees to Pizza Hut.
It's the owners of the franchises that are responsible for fucking over their employees. While Pizza Hut could reduce their fees, they won't. Franchise owners could increase pay, but they won't. It's more likely that the franchise owners will offload deliveries to Uber and Door Dash and not have to worry about managing drivers anymore.
The entire model sucks, so I am not blaming franchise owners over the corporation. They are both at fault for relying on the extortion of teenagers or other people who don't have extremely profitable job skills.
https://franchise.pizzahut.com/faqs/
Edit: Also, these aren't one-off mom and pop franchise owners anymore. These are franchise owning conglomerates that likely have more negotiable franchise fees.
Technically it’s mega franchisees like Provender Capital Group’s “PacSun Pizza,” not PizzaHut that is going to be pocketing the cash from this move.
It's all about maximizing profit.
Expending the least, while taking in the most.
It's staggering how many people don't understand the difference between franchises and corporations on wall street in the internet age
It’s staggering how many people assume things without looking into them. In this case, it’s a corporation called Pac Pizza, LLC and makes over $25 million per year that’s doing the layoffs. I think they can pay their delivery drivers an extra $4 (according to the USA Today article linked above) per hour.
If they had to pay all of their less than 500 employees (according to the Zoominfo page linked above) the extra $4 per hour, and they all worked full time, 40-hour weeks all year, the company would have to pay just over $4 million in extra wages.
Assuming the franchises make the low end of the estimated revenue linked above, $4.5 million would be 16% of the total. Increasing prices by 16% to cover that cost is far less than the approximately 40% customers end up paying when using third-party delivery services.
All in all, this sure seems like the franchise corporation (probably in cahoots with Pizza Hut proper) is just using these delivery jobs as a political stunt in opposition of the mandated wage increase.
Here’s the takeaway, though. Any employer, including but not limited to mom-and-pop businesses, that can’t afford to pay its employees a living wage should not be in business.
It’s staggering how many people assume things without looking into them. In this case, it’s a corporation called Pac Pizza, LLC and makes over $25 million per year that’s doing the layoffs. I think they can pay their delivery drivers an extra $4 (according to the USA Today article linked above) per hour.
If they had to pay all of their less than 500 employees (according to the Zoominfo page linked above) the extra $4 per hour, and they all worked full time, 40-hour weeks all year, the company would have to pay just over $4 million in extra wages.
Assuming the franchises make the low end of the estimated revenue linked above, $4.5 million would be 16% of the total. Increasing prices by 16% to cover that cost is far less than the approximately 40% customers end up paying when using third-party delivery services.
All in all, this sure seems like the franchise corporation (probably in cahoots with Pizza Hut proper) is just using these delivery jobs as a political stunt in opposition of the mandated wage increase.
Here’s the takeaway, though. Any employer, including but not limited to mom-and-pop businesses, that can’t afford to pay its employees a living wage should not be in business.
There's 19,000 pizza huts, but most all of them are franchises. It's not "pizza hut" firing drivers over this. It's franchise owners. Also, if you were to do some napkin math, 19,000 (I know. Just california, but that would hardly be fair to everyone else) pizza huts needing say....5 drivers each at 40 hours a week paid 20 means a cost of about 28 after insurance and such.... that'd be 95 thousand drivers....$106,400,000 a week...$5,532,800,000 a year.
Shit gets expensive.
But face it. Delivery drivers make a lot in tips. People have been willing to do it using their own vehicles for decades while they make super low minimum wages. Making $20/ hour plus the tips will have the delivery guy out doing everyone else at the restaurant, which means their pay will have to go to like $35/hour which means a stupid pizza is gonna cost $30. Let uber eats handle the deliveries.
What pizza hut has 5 full time drivers? There's only 1200 people affected by this and 560 locations so a little more than 2 per location. Now let's look at the cost those delivery apps charge 30%. So if 35% of sales are deliveries now theyre paying Uber ~110k to deliver their pizzas. 28$/hr is high closer to 23-25$/hr for overhead. That's roughly what the delivery drivers would have cost and now they're getting way shittier delivery service and people are much less likely to buy pizza from them. Sounds like a dumb move.
Pizza in Boston delivered by door dash is routinely right about $30 before tip. My credit card offers free door dash premium whatever it's called and I usually choose places offering a promo and tend to order early when there are also promos. That brings things down to the $20s. But it's generally about $30 with tip even doing all that. If I'm not paying attention it's easy to order a $45 pizza.
To be fair I don't eat from pizza Hut or Dominos or other chains. Those might be a few percent cheaper.
$20/hour is only part of employee compensation. It does not include benefits or taxes. Your employer pays a lot of taxes on your behalf.
Don’t even get me started on the money and time taken to recruit, hire, and train new employees.
Don’t misunderstand me. I support a higher minimum wage. I am a firm believer that minimum wage should be $25/hour and increases should be tied to inflation.
Delivery guys should always outdo nearly everyone else at pizza joint, you seem to lack a necessary depth of knowledge and experience to make your conclusions.