Pizza Chain Closes Multiple Locations in California Over New Minimum Wage Law

Mod Pizza, a nationwide chain with over 500 locations, has closed five of its California locations just days before the state implemented a controversial minimum wage hike for fast food workers.

The closures, which occurred at the end of March, coincided with the company’s decision to shutter more than two dozen locations across the country.

While Mod Pizza has not officially stated the reason behind the California closures, employees at the now-defunct Clovis location suspect that the new law, which took effect on April 1, played a significant role. “It just kind of seemed like the right timing, two weeks before all of the fast food locations in California got that increase that we closed,” an anonymous Mod Pizza employee told local Fox affiliate KMPH.

The legislation in question, AB 1228, was signed into law by Gov. Gavin Newsom in September and mandates a minimum wage increase from $16 to $20 for restaurants with at least 60 locations nationwide, with the exception of those that make and sell their own bread.

This translates to an annual salary of $41,600 for affected workers. In comparison, the median fast-food worker in the U.S. earned $13.43 an hour in 2022, while those in California made an average of $16.60 an hour, according to the Bureau of Labor Statistics.

Newsom touted the legislation as a step towards “fairer wages, safer and healthier working conditions, and better training” for the state’s more than 500,000 fast-food workers.

However, the law has also established a “Fast Food Council,” which includes representatives for both workers and employers, with the power to approve further pay increases and set standards for working conditions.

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As a result of the impending financial strain, several eateries have begun to cut jobs in an effort to mitigate the impact of the wage hike.

The legislation has already claimed its first casualty in the form of Fosters Freeze, another fast food joint in the state.

Monica Navarro, former assistant general manager at Fosters Freeze in Lemoore, recounted her shock upon arriving at work only to find that the restaurant owner had permanently closed the doors.

The owner, Loren Wright, expressed regret over the decision but acknowledged that the business would likely be unable to absorb the wage hike.

The repercussions of the minimum wage increase have not been limited to small, local chains.

Michael Ojeda, a 29-year-old Pizza Hut driver in Ontario, California, received a notice from Pizza Hut franchisee Southern California Pizza in December informing him that his last day of work would be in February. “Pizza Hut was my career for nearly a decade and with little to no notice it was taken away,” lamented Ojeda to The Wall Street Journal.

The closure of Mod Pizza locations and the layoffs at other fast food chains serve as a cautionary tale for the potential economic ramifications of such sweeping changes.

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In the coming days and weeks, it is likely that more California fast food establishments will be forced to make difficult decisions in order to remain financially viable, potentially leading to further job losses and reduced opportunities for low-skilled workers in the state.