First 2 sentences make the situation far more clear:
> Pizza Hut is set to lay off more than 1,200 delivery drivers in Los Angeles, Orange and Riverside counties in the coming year, ahead of a new state law that boosts the fast-food minimum wage by $4 to $20 per hour.
> Pizza Hut franchises are preparing to pivot toward third-party apps like DoorDash, GrubHub and UberEats for pizza and food deliveries.
And if you know how "minimum wage" works for DoorDash, etc. drivers in CA...
Pizza Hut has a $4.99 delivery fee in CA so either they are claiming they can't manage to sell four pizzas and hour or this isn't about the bill but about reduced demand.
Ah...Pizza Hut's bottom-line cost of employing a "$20/hour" delivery driver is a lot more than $20/hour. (Assuming they're employing him legally, vs. "cash under the table".)
And maybe talk to somebody who's done delivery driving about being able to sustain a 4-delivery-per-hour average, through their whole shift, day after day.
I suspect they're well aware that this could happen. A business that can't function with reasonably paid workers probably doesn't have much of a legitimate business plan to begin with. After all, razor-thin margins mean minimal income to pay taxes on, so they're of little value to the state and should be replaced by more profitable ventures.
"After all, razor-thin margins mean minimal income to pay taxes on"
Not really. In San Francisco, if you're selling burritos for $10+tax, the government gets $0.86 in sales tax for each burrito, even you make nothing or make a loss.
>After all, razor-thin margins mean minimal income to pay taxes on, so they're of little value to the state and should be replaced by more profitable ventures.
1. Sales tax/gross receipt taxes are a thing in most jurisdictions
2. Low margins are a good thing. It means there's healthy competition driving prices (and thus profits) down.
3. Supermarkets are pretty low margin as well. Should we get rid of them and replace them with GPT wrapper startups?
I suspect what will happen is the laid off drivers will still be delivering pizzas for Pizza Hut, but will be paid by Doordash et al instead of Pizza Hut, and will ultimately have reduced compensation.
C) delivery gig worker: $19.20/hour plus $0.30/mile (but only for the time you're actively on a job)
I guess they did the math and figured out that C is cheaper than A. If the demand for pizza delivery workers is spiky, perhaps it makes more sense to link the costs to the actual output (# deliveries).
But they won't be employees. They'll be contractors. Also, you still have to pay them, it's just that rather than paying them by the hour you're paying per delivery.
Whether that's fair and livable is a separate issue to consider. If it's not fair and livable, it doesn't mean that setting a lower minimum wage is the answer.
Then it's going to be an impasse, because offering human labor for a price that is less than the generally agreed upon lowest amount a person can live on defeats the entire point of establishing a living wage.
Unskilled labor, especially individual laborers, have zero practical leverage. In the absence of government controls wages get driven to zero or unions form to claw back that leverage. So by all means abolish the minimum wage and living wage, I would love to see unions pick up even more steam.
keeping it specific to this article, pizza hut does NOT have to pay them. the consumers bears the cost directly. because of the way food is priced, this will likely be net zero or slightly more expensive for the consumer, but because of the way they perceive price it’s better than pizza hut simply raising prices.
for the same reason that restaurants keep the price the same but in small print charge a mandatory fee of some kind for benefits of what have you.
>but because of the way they perceive price it’s better than pizza hut simply raising prices.
But wouldn't the typical consumer go to grubhub or whatever, see the inflated price, and then grumble about grubhub and/or pizza hut? Also, aren't delivery fees typically not included in the list price? I'm not sure how being slapped with grubhub delivery fees at checkout is any different than being slapped with pizza hut delivery fees at checkout.
That's the opposite of how I perceive price. I don't use delivery apps because they're riddled with fees. If you hide all of that in the cost of the good and pretend it's free, I might fall for it. But if I find out the in store price if different.... Then I'll think you're a lying POS and stop using that service again. I dunno. I don't like fees but I dislike hidden fees even more. Anyway, moral of the story is just do 1 single fee and be very very upfront about it. If you make me pick and choose items and then tell me at the last second.. then you are also scum.
Its part of large package of additional protections and controls adopted as a means of addressing the way that the industry, specifically large fast food chains, have, particularly, via the franchise structure, systemically evaded and been unresponsive to preexisting accountability measures for labor and worker-safety rules (which particularly came to a head during the COVID-19 pandemic).
The specific law is actually a government-industry-labor compromise passed this year that replaces the more expansive set that was initially adopted last year and challenged by the industry.
I noticed that Steak-n-shake went serverless (lol). I wish more restaurants would do this. I abhor begging for refills and tipping for the pleasure of it. It's strange to see so many bottom-tier restaurants have wait-staff and have not already switched over to digital kiosks.
This has nothing with minimum wage which is increasing to $20 for everyone in Seattle on January 1st and isn’t triggering a wave of fast food layoffs. This is just typical corporate cost cutting.
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[ 5.2 ms ] story [ 89.3 ms ] thread> Pizza Hut is set to lay off more than 1,200 delivery drivers in Los Angeles, Orange and Riverside counties in the coming year, ahead of a new state law that boosts the fast-food minimum wage by $4 to $20 per hour.
> Pizza Hut franchises are preparing to pivot toward third-party apps like DoorDash, GrubHub and UberEats for pizza and food deliveries.
And if you know how "minimum wage" works for DoorDash, etc. drivers in CA...
And maybe talk to somebody who's done delivery driving about being able to sustain a 4-delivery-per-hour average, through their whole shift, day after day.
My point is the delivery is alone is almost covering your cost a lot of the time.
It isn't like they only got $20 total...
Not really. In San Francisco, if you're selling burritos for $10+tax, the government gets $0.86 in sales tax for each burrito, even you make nothing or make a loss.
1. Sales tax/gross receipt taxes are a thing in most jurisdictions
2. Low margins are a good thing. It means there's healthy competition driving prices (and thus profits) down.
3. Supermarkets are pretty low margin as well. Should we get rid of them and replace them with GPT wrapper startups?
A) fast food employee: $20/hour
B) other employee: $16/hour
C) delivery gig worker: $19.20/hour plus $0.30/mile (but only for the time you're actively on a job)
I guess they did the math and figured out that C is cheaper than A. If the demand for pizza delivery workers is spiky, perhaps it makes more sense to link the costs to the actual output (# deliveries).
https://calmatters.org/economy/2023/12/minimum-wage-2024/
I don't know much about it.
Unskilled labor, especially individual laborers, have zero practical leverage. In the absence of government controls wages get driven to zero or unions form to claw back that leverage. So by all means abolish the minimum wage and living wage, I would love to see unions pick up even more steam.
for the same reason that restaurants keep the price the same but in small print charge a mandatory fee of some kind for benefits of what have you.
But wouldn't the typical consumer go to grubhub or whatever, see the inflated price, and then grumble about grubhub and/or pizza hut? Also, aren't delivery fees typically not included in the list price? I'm not sure how being slapped with grubhub delivery fees at checkout is any different than being slapped with pizza hut delivery fees at checkout.
This is a situation that should eat into supply side profits because buyers are far more price sensitive and have a wealth of alternatives.
Not taking a position as to whether that's good or bad but hiding the price increase is something that really ought to be difficult to pull off.
The specific law is actually a government-industry-labor compromise passed this year that replaces the more expansive set that was initially adopted last year and challenged by the industry.
I'm going out to eat, likely spending on drinks and tips I wouldn't if I took it home, so I want someone to be bringing me the order while I sit.