(The Center Square) – Shake Shack announced the pending closure of nine locations nationwide, six of which are in California, writing, “These Shacks are not projected to provide acceptable returns in the foreseeable future,” in a SEC filing.
While Shake Shack did not respond to requests for comment regarding the impact of California’s $20 per hour fast food minimum wage that took effect earlier this year, high commercial rents combined now with even higher labor costs have driven other fast food chains, including Rubio’s and Blaze Pizza to shutter stores.
“These closings are expected to optimize the Company’s footprint in these states and maximize profitable growth moving forward, and are not anticipated to impact the Company’s plans to open additional Shacks in these states,” wrote the company in its SEC filing. “The Company currently does not anticipate closing any additional Shacks based on this evaluation for the foreseeable future.”
California Gov. Gavin Newsom’s office says fast food hiring is up, claiming 11,000 fast food jobs have been added since the new minimum wage went into place on April 1, 2024.
“What’s good for workers is good for business, and as California’s fast food industry continues booming every single month our workers are finally getting the pay they deserve,” said Newsom in a statement earlier this month announcing the hiring numbers. “Despite those who pedaled lies about how this would doom the industry, California’s economy and workers are again proving them wrong.”
Shake Shack told Restaurant Business these are the chain’s first non-construction-related store closures. With hundreds of national locations, the closures are not a major downsize; those working at the six California, two Texas, and Ohio stores shutting down have been offered transfers or compensation packages of up to 60 days of pay, the filing stated.
