Fast-food workers are losing their jobs ahead of California's minimum wage rising to $20-an-hour from Monday

Fast-food workers in California are losing their jobs as employers cut costs ahead of a minimum wage increase that will come into effect on Monday.

A law signed by Governor Gavin Newsom last year will increase fast-food workers' minimum wages to $20 an hour at chains with more than 60 locations in the US.

That is 25 percent more than the newly increased standard minimum wage of $16 an hour in California.

Major players, especially pizza restaurants, have said they will reduce staff and hours to brace for the financial ramifications, the Wall Street Journal reported this week.

Chains like Pizza Hut and Round Table have let go of thousands of delivery workers.

California Gov. Gavin Newsom signs the fast food bill surrounded by fast food workers at the SEIU Local 721 in Los Angeles on September 28, 2023

More than 1,200 Pizza Hut delivery drivers are set to lose their jobs in California after the state introduced a new $20 minimum wage for fast food workers

Michael Ojeda, 29, a Pizza Hut driver in Ontario, California, told the Journal he received a notice from Pizza Hut franchisee Southern California Pizza in December informing him his last day would be in February.

'Pizza Hut was my career for nearly a decade and with little to no notice it was taken away,' he said.

In December, two major California Pizza Hut franchises - Southern California Pizza as well as PacPizza - announced they would layoff more than 1,200 drivers. Instead, they said they would rely solely on third-party apps like DoorDash and UberEats.

Round Table Pizza, a chain of around 400 locations, said it will lay off around 1,280 delivery drivers this year, according to state records. Excalibur Pizza, one of its franchisees, has plans to cut 73 driver jobs next month - 20 percent of its workforce.

And McDonald's, Chipotle, Jack in the Box and other chains have said they would raise menu prices to offset some of the increased costs. 

Other restaurants have said they would look for new ways to cut down on staff in restaurants. 

California-based El Pollo Loco told investors recently it was automating some of its salsa-making to mitigate wage rises. Jack in the Box is testing fryer robots and automated drink dispensers, according to the report.

Round Table Pizza, a chain of around 400 locations, said it will lay off around 1,280 delivery drivers this year

'California restaurants across the quick service sector are bracing for the fast-food wage hike and the tough scheduling, staffing, and pricing decisions they are forced to confront,' the California Restaurant Association said in a statement.

'We are already seeing the cost pressures cascade throughout the restaurant industry and, indeed, beyond.

'Unfortunately, these challenges exasperate an already fragile small business operating environment, forcing entrepreneurs - of every stripe - to make decisions that stymie employment growth opportunities.'

Monday's wage hike comes after a long battle between Governor Newsom and fast-food chains in California over wages.

In 2022, Newsom signed the FAST Act into law which called for a $22-an-hour minimum wage for fast-food workers from 2023.

But a coalition of restaurant industry organizations pushed back, warning it could raise costs for restaurants by $3 billion.

Last year, a new law - AB1228 - replaced the FAST Act and reduced the wage to $20. It is expected to affect 557,000 fast-food workers and 30,000 restaurants in California.