Major food franchise, Rubio’s Coastal Grill, confirmed it is pulling over 40 “underperforming locations” out of California due to “rising costs” as the Democratic state implemented its new minimum wage at $20 per hour just two months ago.
A spokesperson from the company stated that following a “thorough review” of their stores they have decided to close 48 locations in California as of May 31, noting that 86 stores will remain still in Arizona, Nevada and California. (California Restaurants Are In Crisis As Regulations, Inflation Cost Owners)
“The closings were brought about by the rising cost of doing business in California. While painful, the store closures are a necessary step in our strategic long-term plan to position Rubio’s for success for years to come,” the statement read.
Shockwaves of closures have been occurring throughout California for restaurants and retail stores as high crimes and high costs have been affecting business. So far this year, popular restaurants such as Manzkes’ Bicyclette and Patrick’s Roadhouse shut their doors due to the rising costs, business owners told the Los Angeles Times.
Lauren and Peter Lemos shut down their Chinatown sandwich shop in October 2023, but later reopened the store in March, realizing they couldn’t afford to leave the business due to the incoming bills.
“Costs are higher than ever, risks are higher than ever,” Lemos told the LA Times. “I always want to have some kind of optimistic outcome for the future, but I do really worry, ‘Is it going to be sustainable?’ I’m not sure we’ll have mom-and-pop restaurants for a long time more.”
Interior of a McDonald’s restaurant showing modern seating and decor with natural lighting and American flag visible outside, Lakewood Boulevard, Downey, California, December 26, 2023. (Photo by Smith Collection/Gado/Getty Images)
“After closing Chinatown we realized we still have our lease, we still have our [federal] loans from the SBA, from COVID, the bills are still coming in,” Lemos continued. “We can’t even afford to close. We can’t afford to be open, we can’t afford to be closed.”
Former Fosters Freeze Assistant General Manager Monica Navarro warned in early April, following the start of the state’s minimum wage raise from $16 to $20, warned California’s rising cost for workers will have an impact. During an interview with Fox Business, Navarro stated that her business announced its closure on April 1, laying off all their employees.
“I can see their intentions with increasing the minimum wage, thinking that it will attract more people, but I honestly don’t think it’ll work. This is not the first business that’s closing,” Navarro stated. “There’s already a few local businesses, for me, that are closing – so I feel like this is just only the beginning.”
Between last fall, when Democratic California Gov. Gavin Newsom signed the rising minimum wage into law, and January, data has shown that fast-food employment has dropped 1.3% from 726,600 people which is an estimated 9,500 job cuts, according to the Wall Street Journal. Restaurants such as Mcdonald’s, Chipotle Mexican Grill and Jack in the Box have raised menu prices due to the wage increases, and 80% of Americans now consider fast food a “luxury” item.