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California Pizza Huts lay off all delivery drivers ahead of minimum wage increas

usatoday.com

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Re: California Pizza Huts lay off all delivery drivers ahead of minimum wage increas

#31

Post by toomuchtodo »

doctornoble wrote: post #17

Perhaps Yum Brands has the data to back this up, but it seems quite a silly response that feels more political/ideological than based on sound economics. BIL was COO of a pizza chain. The cost for a large pizza was around $1.50 - even for pricey toppings and gluten free bread. Labor is cheap at ~60 seconds per pie. Biggest costs was rent. A $5 raise could be absorbed across and then some with a 10¢ increase in price…

If rent is the predominate cost, why do pizza delivery only ghost kitchens not take off? Doesn’t matter where it’s made, just where the customer is. You could make them in a shipping container dropped in a big box parking lot with a roll up door for delivery drivers to load their trunk, like Spirit Halloween for pizza. What am I missing?

You don't need a robot pizza machine, you need an operating model where rent doesn't hold your bottom line hostage (based on my very limited understanding of the business fundamentals). Rent goes up? Class 8 Semi pulls up to pull the trailer to somewhere else with hookups.

Edit: thanks for the learnings y’all!

Re: California Pizza Huts lay off all delivery drivers ahead of minimum wage increas

#32

Post by jpalawaga »

doctornoble wrote: post #17

Perhaps Yum Brands has the data to back this up, but it seems quite a silly response that feels more political/ideological than based on sound economics. BIL was COO of a pizza chain. The cost for a large pizza was around $1.50 - even for pricey toppings and gluten free bread. Labor is cheap at ~60 seconds per pie. Biggest costs was rent. A $5 raise could be absorbed across and then some with a 10¢ increase in price…

maybe they decided that they can squeeze an extra couple percentage points of revenue this way while keeping menu prices low. so exec comp can keep going up.

Re: California Pizza Huts lay off all delivery drivers ahead of minimum wage increas

#33

Post by [deleted] »

voidfunc wrote: post #12
throwup238 wrote: post #6

> The layoffs come as fast-food workers in California are set to get a pay bump of close to 30% in April as the minimum wages rises from $16 to $20 an hour. It's not "close to 30%," it is "exactly 25%." Whoever wrote that needs to be sent back to middle school remedial math. As if I needed another reason to not eat at pizza hut. This sounds like a cynical ploy to get sub-minimum wage gig economy delivery drivers via…

Reporting is dead. They probably reached out to Pizza Hut PR department for the exact figure and went with what corporate told them. The PR department wants to make the increase looks as unreasonable as possible so gave them the 30% line. The reporter then writes that in the article. Close to 30% is technically true, but it sounds like a bigger hike to the reader.

[deleted]

Re: California Pizza Huts lay off all delivery drivers ahead of minimum wage increas

#35

Post by CharlesW »

caycep wrote: post #22

Pizza Hut here seems to be on its last legs too...the last time I saw one was at some rest stop on a trip to Arizona...

It's definitely dying in SoCal, apparently the result of private equity firms having purchased most franchisees.

Re: California Pizza Huts lay off all delivery drivers ahead of minimum wage increas

#36

Post by karaterobot »

CharlesW wrote: post #25
karaterobot wrote: post #13

> Customers must use third-party apps like DoorDash, GrubHub and Uber Eats for food deliveries at the affected chain restaurants. I don't order delivery very often, so I was surprised when the last time I did it, the pizza place that advertised delivery just silently passed the order on to Doordash, with all the downsides of that process (data sharing, increased price, decreased pay for the driver, and generally wors…

> I understand that Doordash gives workers the option of being paid minimum wage… Is it even an option in California? "Guaranteed minimum earnings: When you dash in California you earn at least 120% of minimum wage (based on the local minimum wage at the pick-up location) for active time on the platform (time spent on a delivery, starting from when you accept an offer to when you complete it), plus $0.34 per mile dur…

It is elsewhere; maybe not in California. There appears to be two payment modes, base pay and earn by time, and the driver can choose which they want to operate under.

Re: California Pizza Huts lay off all delivery drivers ahead of minimum wage increas

#37

Post by ranger_danger »

karaterobot wrote: post #13

> Customers must use third-party apps like DoorDash, GrubHub and Uber Eats for food deliveries at the affected chain restaurants. I don't order delivery very often, so I was surprised when the last time I did it, the pizza place that advertised delivery just silently passed the order on to Doordash, with all the downsides of that process (data sharing, increased price, decreased pay for the driver, and generally wors…

> with all the downsides of that process (data sharing

how is that legal?

Re: California Pizza Huts lay off all delivery drivers ahead of minimum wage increas

#38

Post by paulgb »

doctornoble wrote: post #17

Perhaps Yum Brands has the data to back this up, but it seems quite a silly response that feels more political/ideological than based on sound economics. BIL was COO of a pizza chain. The cost for a large pizza was around $1.50 - even for pricey toppings and gluten free bread. Labor is cheap at ~60 seconds per pie. Biggest costs was rent. A $5 raise could be absorbed across and then some with a 10¢ increase in price…

I wouldn't be surprised if with the rise of Uber Eats / Doordash, they were wanting to get out of the business of first-party deliveries anyway, and saw the wage increase as a final straw. I can't imagine that these companies particularly want to be in the business of last-mile logistics, so much as that historically it was a very complimentary business to selling pizza. Now that companies have sprung up around a complete food ordering business, it makes sense to outsource that part to them and stick to their specialty, making and marketing food.

Re: California Pizza Huts lay off all delivery drivers ahead of minimum wage increas

#39

Post by mytailorisrich »

jpalawaga wrote: post #21
tekla wrote: post #11

Earlier quoted context omitted.

Yeah, stopped using delivery for that reason. It got hilariously too expensive.

the pay bump i'm talking about is very recent, but yes, I agree, delivery became too expensive. And it's no wonder. Restaurants delivering have very low overhead. A phone line and a delivery driver. When you're on grubhub/doordash/etc, now somebody has to pay for a mountain of software engineers, marketing expenses, servers, customer service people, executive comp, etc. It inserted an expensive middleman where there…

The issue of pay for delivery drivers is that the job is very low productivity (cannot make that many deliveries per hour and consumers are not willing to pay much for delivery).

I think in general it works for pizzas because pizzas have very high margins so that some or all delivery costs can be bundled in the retail price of the pizza.

Re: California Pizza Huts lay off all delivery drivers ahead of minimum wage increas

#40

Post by jimbob45 »

toomuchtodo wrote: post #31
doctornoble wrote: post #17

Perhaps Yum Brands has the data to back this up, but it seems quite a silly response that feels more political/ideological than based on sound economics. BIL was COO of a pizza chain. The cost for a large pizza was around $1.50 - even for pricey toppings and gluten free bread. Labor is cheap at ~60 seconds per pie. Biggest costs was rent. A $5 raise could be absorbed across and then some with a 10¢ increase in price…

If rent is the predominate cost, why do pizza delivery only ghost kitchens not take off? Doesn’t matter where it’s made, just where the customer is. You could make them in a shipping container dropped in a big box parking lot with a roll up door for delivery drivers to load their trunk, like Spirit Halloween for pizza. What am I missing? You don't need a robot pizza machine, you need an operating model where rent doe…

That's what Chuck E Cheese should be doing. They've got the playground/arcade business to be able to subsidize their pizza business to out-compete every other pizza chain out there. Instead, they're cutting costs on both fronts to have...two bad businesses.
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