(The Center Square) – San-Diego based Mexican fast food chain Rubio’s Coastal Grill is shutting down 48 California locations, citing the “rising cost of doing business” as a factor in its rationale. Business leaders point to the state’s $20 per hour fast food minimum wage, which took effect in April, as a major new pressure point for businesses operating in the state.
“Rubio’s Coastal Grill…after a thorough review of its operations and the current business climate, has decided to close 48 underperforming locations in California as of May 31, while keeping 86 stores in California, Arizona, and Nevada open,” said the privately-owned chain in a statement.
California’s $20 per hour fast food minimum wage took effect on April 1, and is blamed for 9,500 lost jobs through the end of April, representing a 1.3% decrease since September 2023. In addition to layoffs, fast food chains are utilizing greater automation and price increases to offset higher labor costs.
Because fast food is such a large, visible sector of minimum wage employment, small businesses say they also face pressure to raise wages to compete for the same pool of minimum wage workers.
“We need to start calling out our state’s role more often as a contributing reason ‘underperforming’ fast-food franchises are being closed by their parent companies,” said National Federation of Independent Business California Director John Kabateck to The Center Square. “We now have a crazy quilt of minimum-wage laws that make it impossible to hire with any certainty sales will match expenses, paid leave proposals making the retention of employees more and more difficult, and higher unemployment insurance taxes, all of which make throwing in the towel more appealing than trying to stay open for business.”
California currently has the nation’s highest unemployment rate at 5.3%.
