Pizza chain raises prices in California to offset new minimum wage law
Pizza Factory said most of its franchisees raised prices an average of 10%
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Pizza Factory, a pizzeria with more than 100 locations across the West Coast, hiked menu prices before California's new minimum wage increase went into effect to cover additional costs.
Mary Jane Riva, the CEO of Pizza Factory for over a decade, told FOX Business that most of the franchisees raised prices 10% on average.
The company confirmed the increases took effect before April 1, when legislation took effect that bumped up the minimum wage from $16 to $20 for restaurants that have at least 60 locations nationwide, except those that make and sell their own bread.
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"While we're aware of the hurdles that come with this bill, we're sticking to our game plan of strategic planning to keep things profitable and on track with our company goals," Riva said. "Many people still need to realize that these are family owner-operators living and working in the community."
However, according to Riva, a more than 30-year veteran of the industry, "it's not just the minimum wage that's causing stress and price hikes."
A shot of a Pizza Factory location, one of over 100 located on the West Coast. (Pizza Factory )
Aside from the minimum wage increase for workers, Riva said the company is also contending with "workers' comp, employee taxes, and California's unfriendly insurance environment."
Initially, franchisees were concerned about customer retention given the price hikes, but Riva said that most owners are still "confident that a moderate price adjustment won't sway most of our guests."
However, Riva argued that the new legislation "doesn't only affect franchises; it is trickling down to all businesses that now also have to raise their wages. Franchising was meant to be a tool to move the minimum wage up for all."
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Gov. Gavin Newsom signed the legislation, AB 1228, into law in September, saying at the time that "California is home to more than 500,000 fast-food workers who – for decades – have been fighting for higher wages and better working conditions."
A logo of the Pizza Factory, which has over 100 locations on the West Coast. (Pizza Factory )
He said the state is "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."
In addition to the pay raises, it also established a "Fast Food Council," including representatives for both workers and employers, that can approve further pay increases and set standards for working conditions.
Since it was enacted though, a handful of food chains have upped prices to offset the costs. Some companies even closed up some shops in order to avoid financial fallout.
An In-N-Out Burger located on Rte. 66. (Robert Gauthier/Los Angeles Times via Getty Images / Getty Images)
A New York Post investigation revealed some fast-food chains in the Los Angeles area raised prices when the legislation took effect, including Burger King, owned by Restaurant Brands International, Hart House and some In-N-Out locations.
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Mod Pizza, a nationwide chain, closed five shops in the state. Fosters Freeze also shut down one location.
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. The chain is part of Yum! Brands.