California’s move to increase the minimum wage for fast-food workers to $20 an hour, effective April 1, is already leading to significant changes within the state’s restaurant industry. Several restaurants have begun laying off staff and reducing working hours to manage costs ahead of this mandate. Major pizza chains and other restaurant operators, including franchisees for Pizza Hut and Round Table Pizza, are planning to lay off around 1,280 delivery drivers.

The wage increase, while aimed at improving the lives of fast-food workers, is also prompting a shift towards automation and external delivery services to offset rising costs. El Pollo Loco and Jack in the Box are among the chains that are experimenting with technology to reduce labor dependency.

A Congressional Budget Office study suggests that while minimum wage increases can elevate wages for many, they might also lead to employment reductions and higher consumer prices due to increased operational costs.

Restaurant operators are bracing for the financial impact, with some making difficult decisions such as staff reductions and reconsidering expansion plans within California due to the anticipated increase in operating costs. These developments signal a transformative period for the state’s fast-food industry, balancing between higher wages for workers and the operational realities employers face.