In response to the rising cost of doing business in California, San Diego-based Mexican fast-food chain Rubio’s Coastal Grill is closing down 48 locations in the state. The decision was made after a thorough review of operations and the current business climate.
The closure is attributed to California’s $20 per hour fast-food minimum wage that came into effect in April, which has put pressure on businesses in the state. This increase in labor costs has forced fast-food chains to turn to greater automation and increased prices as a way to offset these expenses. The pressure on small businesses to raise wages in order to attract minimum wage workers is also increasing due to competition from fast-food chains.
According to the National Federation of Independent Business California Director John Kabateck, businesses in the state are facing challenges such as a patchwork of minimum wage laws, difficulties in matching sales with expenses, proposed paid leave policies making it harder to retain employees, and higher unemployment insurance taxes. These factors are contributing to the closure of fast-food franchises in California. Currently, California has the highest unemployment rate in the nation at 5.3%.
