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

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.

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.

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.

It doesn't even make sense as sure, Uber doesn't pay drivers much and Pizza Hut won't have to employ them, but customers will have to pay more. So Pizza Hut could have just said "due to increases in wages we have to implement a delivery fee", and actually paid their drivers. They'd rather do this dramatic 'omg we have to fire them' thing though.

I've only ordered from the big ones to avoid fucky delivery services. It just eliminates the point of it.

Why on earth would anyone even order Pizza Hut after this?

More money than sense.

Businesses have long realized it's easier and cheaper to rip off a smaller group of wealthier customers.

Right? Just charge me $5 for delivery and pay your drivers a decent wage.

Just as a clarification (not a defense) from someone that drives for DoorDash - every time the driver picks up a pizza order, they are required to provide photo proof that they own a pizza bag. I'm not saying this forces drivers to use them, but they have to upload different pics of their pizza bags sometimes with every pickup.

Edit: autocorrect

This is so weird to me because pizza is one of the few things I actually order for delivery.. there isn’t much around here other than 3rd party services, which I don’t use because I’m rural and the way it works here is just gross. Had 6 come in for the same failed order while I was out on Tuesday (menu wasn’t open for that item but it was ordered through another platform, and 6 people came asking for it for the same order because of how the platform works). I can’t imagine actually working there.

But I suppose in more urban areas, pizza hut is competing with actually good food also on delivery (for a very steep markup people are apparently willing to pay or the services would die), so it’s no surprise they can’t compete on their own; and still also turn record profits. Heaven forbid they die in the region. 🙂

This is why I won’t order pizza from places that use a sub contracted delivery. It gets here like shite. No thanks.

Yeah. It's pretty bad. It's the good pizza places that do that, too.

Right? It's pretty bad. A lot of the food drivers don't really speak English, either, so you're kind of fucked in some way each time you order.

(I don't mind immigrant uber drivers, but it's a pain when there are food issues and they can't understand you.)

It has been getting worse.

Out of curiosity, did you send that message recently or a day or two ago? My inbox says it's been like 20m. Looking at the thread it says 2 days.

Bay Area pizza is great if you want to spend $45 on a pizza

That's good to hear. I left the bay area almost 20 years ago and I remember there being very little good pizza back then. Don't get me wrong - there was some great food to be found, but the pizza wasn't it

Look there is always better pizza, but I'm still going to have to buy Pizza Hut once in a while unless The Pizza Shop in SF starts selling stuffed crust

People generally should use the best option. Often expense is the metric. These are able to operate at competitive rates because they get away with shenanigans. They should be regulated properly, then their rates would reflect that and people would use them less.

I look forward to the downvotes again because everyone has their heads so far up their asses but we are the problem. Fuck us.

We are the reason we are racing to the bottom. We expect cheap & fast and we don't care how it happens as long as it does.

Which is exactly what they said?

I'm pretty sure certain instances actually censor out swear words automatically.

You could say it anywhere except in front of insecure reddit mods.

AKA a "contractor", AKA a 1099 (vs. W2) 'employee'.

To be fair, just because you may be out of touch with some part of business or society doesn't mean it no longer exists or operates.... That's incredibly self centered. We are all out of touch with various industries, but that doesn't mean it no longer operates as intended.

Every pizza shop I've been to in the last 5 years has been bustling with sit down eaters. Just not pizza hut.

There’s a bunch of old dumbasses who refuse to learn any new skills. We’re still gonna need people at banks until uhhhh… they’re gone.

https://youtu.be/TJcnrcnQjNY?feature=shared&t=45

Well I obviously need a yacht to dock my yacht in. What kind of sloven only has one billion kind of oligarch do you think I am?

Domino's runs very tight delivery radius like 2 miles so they probably just get by with less staff and more locations

Delivery apps are not in a strong position though - both demand (customers) and supply (delivery personnel) easily change where they are on.

Shareholders. They might have a opinion on massive layoffs and long term success of the company

Domino’s is horrible but still better than Pizza Hut.

Most chains don't have stuff crust

Good. I tried it a couple times and it was gross. The pizza was shit too.

And? Stuffed crust is terrible. Ever wonder why real pizza places don’t bother?

Have you even been to a real pizza place or is Pizza Hut all you know?

That heavily depends on location. Here in Philly competition among food places is so tight that a lot of places offer a better deal than the chains and have much better products.

I’ve found it’s highly variable by location and how much of a fuck the franchisee/owner cares.

I think they removed the msg and it was game over for their pizza. Used to think of it as like premium pizza (but with heartburn) now I think of it as a more expensive version of dominoes.

Do you know to what specific change in their recipe this is owed? I haven't had pizza hut in 20 years, their ground meat looked like it was shaped to resemble small bones like you would for maybe dog-treats. idk, that was the last time trying their pizza.

It's insane to me that people are willing to pay the exorbitant delivery fees. Whenever I've checked, especially lately, it doubles the price even before tip (including things in my immediate area). Uber/Lyft/doordash all want to offset their costs onto both the restaurant and customer. I can't see that it's sustainable in the long term to do this.

That deep dish is not something you duplicate at home with frozen options. I'm with you guys but let's be realistic.

If you read around this thread you’ll see that lots of Californians ordering it specifically because of stuffed crust. It’s weird.

Oh my god no wonder they have shit sodas

Not since about 25 years ago. It was spun off from PepsiCo in 1997. And in fact it was not called Yum until sometime later than that -- it was never Yum under PepsiCo.

Edit to add: I still don't go there, of course.

since I got Walmart+

There's something really disappointing about reading that.

They should create incentive by taxing the shit out of businesses and offering tax breaks for actually offering living wages and benefits to their employees. If the “correct” answer in capitalism is to find the cheapest solution,

I think this is a novel idea and an interesting thought experiment.

If we passed this federally, I think it's most likely we see an outsourcing - to ourselves. With the market floor raised so high across the board, distortionary effects would then kick in and what I posit we'd see is a shitload of both business and consumer flight to rural areas.

Prices for rent, obviously, would go through the fuckin roof. This would cause a mass exodus to surrounding areas, but I think business investment would actually beat them, because if you're paying 60k/year anyway, you may as well put your facility in the cheapest possible location.

Businesses are already shifting toward being physically close to their suppliers/major logistics hubs, to save cost elsewhere, so big "shipping towns" (which are, essentially, a few big wholesale distributors and nothing else) could see massive investment.

What's weird for me is that this may actually help our housing situation in the medium term, as explosive growth in these areas even out demand hotspots.

Idk about high raises in labor market floors to predict much beyond that, but it's something I'll definitely check out.

These aren't completely pie-in-the-sky proposals, either. Simply tying maximum compensation for publicly owned companies would start this kind of a chain rolling, in a smaller way, I think. Labor prices would jump ludicrously just from the amount of low-skill labor employed by major companies.

Inflation would be bonkers and you can't raise interest rates too fast or you basically nuke your economy, so how this plays out for the average joe is anyone's guess. Fun to think about tho

In an alternate timeline where restaurants never thought to offer delivery (or regulated against it…since objectively it is kind of strange how we do it now), but did offer takeout, I’d expect private food courier services would have thrived. Especially in denser areas.

Even in an era before DoorDash and internet, it’d be a call-center/concierge style.

Except minimum wage should support you fully because, as you may have noticed in high school, NOT everyone working at your minimum-wage workplace was "a high school kid". Walmart and a lot of other places that skate by offering minimum wage effectively outsource the rest of the money they SHOULD be paying to the government - what you may know as "your fucking taxes". You wanna see less people using welfare? You should be out there demanding companies pay more - some estimates are that Walmart's profits are effectively buoyed as much as 40% by taxpayer-funded welfare programs like EBT, SNAP, TANF, and various forms of rent assistance, and there are similar numbers for other minimum-wage retailers and workplaces.

"BUT THAT MIGHT RAISE PRICES", you cry? Well, here's the good thing - by raising MINIMUM wage, you can go to your boss and say "hey I'm only making $17 an hour doing [highly skilled job], that's only $2 more than minimum, could we work out a raise?" And if you get your whole workplace to do this, or enough of your fellow coworkers doing similar positions, they would definitely feel far more compelled.

My argument is that the jobs DIDN'T go away, they just became gig jobs. In the big picture the increase had no effect except for speeding up the transition from one form of delivery job to a different form of delivery job.

Min wage has to cover living expenses because otherwise people are forced to make up the difference from wellfare. So in effect it is a subsidy from taxpayers to companies that pay low wages.

Full time, min-wage workers cannot afford rent for a 1-bedroom flat in 90% of the entire country.

Speaking of which, when I used to live around NY/NJ, every single random pizzarias or Italian places in general I've been there has been absolutely amazingly good. Maybe there is too much competition for Pizza Hut there.

So i work in the industry

Pizza huts are barely open with even as low as 2 employees at a time. Little ceasars had 10 workers on the holidays

Every franchise could vary but not really lol the original owners of all those pizza huts are no longer careee

/uuuhmmm burp

The franchise owners are still extracting wealth from the restaurant owners. That 1.2 billion came from somewhere, it didn't just poof into existence. That's 1.2 billion that should have gone to the workers instead of the rich shareholders who own the company. As a whole, as an entire organization they are greedy fucks and it shows.

the last time i had pizza hut, their last chance; it was typical, a grease pit. that poor cardboard. i filled out an online complaint form and the store manager called me asking what they could do.

"change your recipe. you sell grease with a little pizza". i was honest with the guy, its not his franchise thats the problem, its the product. i had finally learned my lesson. pizza hut clearly hasnt learned theirs

Why? Did he use a racial slur in his comment and I just didn't see it?

It's been a while since I've had Papa Johns, but they were at least as good/equally bad as Pizza Hut.

I worked as a driver for Pizza Hut in the 90s, and their pizza was OK, but plain. I was sick of their sauce by the 3rd week I worked there. Pizza Hut went to shit when they started to move away from having sit down restaurants. Now their pizza is terrible.

These days there are plenty of other pizza places to choose from, and I'd never order from either Papa Johns or Pizza Hut. Not that I was ordering it much, but final straw for Pizza Hut was when they did their "Any PIzza, Any Crust, $10" and then had "Stuffed crust excluded" in the small print.

If I want cheap pizza I'd get Little Caesar's or Pizza Ranch. At least I won't feel ripped off.

I honestly don't know if Papa Johns is good or bad, because their ads make them look like hot garbage and I've never been brave enough to see if they taste as bad as they look.

2 words: pizza buffet

Door dash dropped my pizza after I ordered directly from Papa John's website. The driver dropped it and put it back into the box, gravel and all

It would have been hilarious if I weren't hungry and waiting over an hour

Had to get my cc to do a charge back, since I couldn't get support from Papa John's, nor door dash

It sucks, takes forever, is usually cold when it arrives, and the pizza’s not even good.

Sounds like the free market should punish them, then.

Of course, that would require people other than yourself to have standards.