Minimum Wage Law Sparks Pizza Chain Shutdown

( – Nationwide pizza chain Mod Pizza in late March closed down 27 restaurants throughout the United States, including five of its locations in California, KMPH reported.

The pizza chain has 500 restaurants nationwide, including 53 in California.

The company did not explain the reason behind the nationwide closures. However, that didn’t stop some from suggesting that it closed five of its 53 California locations due to the state’s new minimum wage law which took effect on April 1.

The Democrat supermajority in the California legislature passed the minimum wage law last year which increased the hourly minimum wage for most fast-food workers in the state to $20.

A former Mod Pizza employee from one of the five California locations that closed told KMPH that based on the timing of the announcement, he had “a feeling” that Mod Pizza closed the location due to the increased minimum wage.

The Wall Street Journal reported in late March that many California restaurants were already laying off workers in anticipation of the minimum wage hike, with most of the job cuts coming from pizza chains in the state.

Restaurants in the state were also cutting back hours and imposing a freeze on hiring to prepare for the added cost.

In October, Chipotle CFO Jack Hartung told Yahoo Finance that the company would be forced to raise its prices to comply with California’s minimum wage law.

Governor Gavin Newsom signed the new minimum wage into law last September requiring fast food chains with a minimum of 60 locations nationwide to pay $20 an hour at their California locations.

In December, Pizza Hut announced that it was cutting 1,200 delivery jobs, while some of its California franchises also notified the state that they were discontinuing delivery services altogether.

Excalibur Pizza told USA Today in late March that it would cut 73 delivery jobs, or 21 percent of its workforce, starting in April and would transfer the delivery service to an outside party.

Copyright 2024,