Pizza chain closes California locations before minimum wage law took effect

A pizza chain shuttered some of its California locations before the state boosted the minimum wage for fast food workers earlier this month. 

Mod Pizza, which has 500 locations nationwide, closed five shops in the state at the end of March, according to local Fox affiliate KMPH.

Those shops were among the over two dozen locations that the company closed across the nation. The company did not specify a reason, but workers in Clovis, whose shop abruptly closed, told the outlet they suspected that the California closures had to do with the new law that took effect in April, 

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"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," a Mod Pizza employee, who asked to remain anonymous, told KMPH.

FOX Business reached out to Mod Pizza for comment. 

The legislation that went into effect in California on April 1 increases the minimum wage for restaurants that have at least 60 locations nationwide, except those that make and sell their own bread, from $16 to $20. This equates to an annual salary of $41,600.

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. 

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Gov. Gavin Newsom signed the legislation, AB 1228, into law in September. In addition to the pay raises, it also establishes a "Fast Food Council," including representatives for both workers and employers, that can approve further pay increases and set standards for working conditions.

"California is home to more than 500,000 fast-food workers who – for decades – have been fighting for higher wages and better working conditions," Newsom said in September, adding that the state is taking "one step closer to fairer wages, safer and healthier working conditions, and better training by giving hardworking fast-food workers a stronger voice and seat at the table."

The issue is that several eateries have begun to cut jobs, in an effort to get ahead of the possible financial repercussions. For instance, the legislation led to the demise of Fosters Freeze, another fast food joint in the state. 

Monica Navarro, former assistant general manager at Fosters Freeze in Lemoore, said on "The Bottom Line," she found out when she got to work the restaurant owner closed the doors for good. 

The owner, Loren Wright, told KMPH that this was the "last thing" they wanted to do, but they knew the business would likely not be able to absorb the wage hike.

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Michael Ojeda, 29, a Pizza Hut driver in Ontario, California, told The Wall Street Journal he 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," said Ojeda.

FOX Business' Breck Dumas and Louis Casiano contributed to this report.