(The Center Square) – San Diego-based Mexican fast-food chain Rubio's Coastal Grill is closing 48 locations in California, citing “rising costs of doing business” as the reason. Business leaders say the state's $20 hourly fast-food minimum wage, which went into effect in April, has put significant new pressures on companies operating in the state.
“Following a thorough review of our business and the current business environment, Rubio's Coastal Grill has decided to close 48 underperforming restaurants in California, effective May 31, while keeping 86 restaurants open in California, Arizona and Nevada,” the privately held chain said in a statement.
California's $20 hourly minimum wage at fast-food restaurants took effect on April 1 and is blamed for the loss of 9,500 jobs by the end of April, a 1.3% decline since September 2023. In addition to layoffs, fast-food chains have been increasing automation and raising prices to offset rising labor costs.
Because fast food is such a large and visible sector in hiring minimum wage workers, small businesses say they also face pressure to raise wages to compete for those same minimum wage workers.
“We need to call out the state more often for its role in contributing to underperforming fast-food restaurants being closed by their parent companies,” John Kabatek, president of the California chapter of the National Federation of Independent Business, said at Center Square.
“Right now, we have a plethora of minimum wage laws, it's impossible to hire with confidence that sales will cover expenses, paid leave offers are making it harder to retain employees, and unemployment insurance taxes are rising. These are all circumstances that make giving up seem more appealing than trying to stay in business.”
California's unemployment rate currently stands at 5.3%, the highest in the nation.
