The MOD Pizza chain is denying reports that it shut down five of its California eateries because the state raised the minimum wage to $20 an hour.
According to a report by the pizza industry news site PMQ.com, MOD Pizza closed 26 locations over the past few weeks – in addition to the five eateries in California, the chain closed three stores each in Philadelphia, Chicago, the Dallas area and the Washington, D.C. area, plus two each in Wisconsin and Seattle and one each in Florida, Oklahoma, Oregon and Virginia; a franchised restaurant in Atlanta closed last month.
However, CEO Beth Scott said the closures were based on location underperformance, adding that additional closures were possible.
“Like any successful business, we continually evaluate the performance of all of our assets,” Scott said. “In a company of our size, not every location is going to be successful over time due to a wide range of factors.”
Scott also acknowledged media reports that the California closing was tied to the newly increased minimum wage in the store, but she pointed out the Seattle-headquartered company still has 53 locations across California.
“While rising wages in California and other states certainly were a factor in the underperformance of the five locations we closed, the timing of California’s minimum wage hike taking effect and our closings in the state was coincidental,” she said, adding that some media reports that MOD Pizza employees were not given advanced notice of the restaurant closings was not unusual.
“For many reasons, including guest and employee safety and security, it is impractical to provide significant advance notice when a restaurant closes,” she said. “We notified squads in the restaurants impacted 1-2 days prior to closing and communicated the timing of final paychecks and severance payments at day-of-closing meetings. Despite our best efforts to clearly communicate this, there was still subsequent confusion among employees about the timing of final paychecks.”
Photo by Rick Obst / Flickr Creative Commons
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