California’s $20-an-hour fast-food minimum wage has its first casualty.
Mexican chain Rubio’s Coastal Grill is closing 48 restaurants in the state due to the “rising cost of doing business in California.”
“While painful, the store closures are a necessary step in our long-term strategic plan to position Rubio’s for success for years to come,” a Rubio’s spokesperson added.
The San Diego-based chain is known for its fish tacos.
Ralph Rubio discovered them during spring break in Baja California, Mexico, and opened a stand selling them in 1983. He is even credited with introducing it to Americans.
Before the pandemic hit, it grew to about 200 restaurants — mostly in California but also in four other states.
Runio’s has abruptly closed 48 restaurants in California, including this one in Santa Clarita
A sign at Santa Clarita restaurant
The pandemic has hit the chain hard and — along with competition from sprawling chains like Chipotle — forced it to close all of its eateries in Florida and Colorado.
It filed for bankruptcy protection and restructured in the fall of 2020.
This week’s 48 closures are just over a third of the 134 remaining in California, Nevada and Arizona.
Of these, 24 are in the Los Angeles area, 13 around San Diego, 13 and 11 in Northern California, including Sacramento and the Bay Area.
Experts pointed to the effect of California’s $20-an-hour minimum wage for fast-food restaurants.
“The first thought that came to my mind was that they were going to be hit really hard by this increase in the minimum wage for fast food workers from $16 an hour to $20 an hour,” University of San Diego economics professor Alan Gin told me. NBC.
“But there are also a number of other issues Rubio’s faces. They have had financial problems for a long time.’
Orange County Register reported that Rubio’s employees took to social media after learning of the closures as they came to work on the weekend.
On Reddit, someone wrote: “Former employee after today.
“They told us this morning when we got to work that today would be our last day. No severance, no warning, nada. I don’t know exactly which locations are going there, but there are a lot of them.’
Experts say the chain’s troubles in California are no surprise, especially with the increase in the minimum wage from $16 to $20 an hour.
Rubio falls into the category of chains that are large enough to fall under California’s jurisdiction—with 60 or more restaurants nationally—but don’t have thousands of outlets to achieve economies of scale and drive down fixed costs
UCLA economist Brian Wheaton said CBS that such a ‘cost increase’ could be the thing that pushes these fast food chains over the edge into bankruptcy.’
He added, “I think this is the kind of thing we’re seeing in Rubio’s case.”
Rubio’s would not comment on which restaurants are closed, but a Reddit user listed some of the closures around LA:
Adelanto, Anaheim Hills, Brea, Cerritos, Eastvale, Fountain Valley, Fullerton, Huntington Beach (Beach Boulevard), La Habra, Lake Forest, Lakewood, Long Beach, Marina Del Rey, Ontario, Orange (N. Tustin St.), Oxnard , Pasadena, Placentia, Rancho Santa Margarita, Santa Ana (off Highway 55 along 17th Street), Santa Clarita, Seal Beach, Tustin, Ventura and Whittier.
Another twelve closed in San Diego County.
Once DailyMail.com gets a full list, we will update the article.
Rubio’s is a fast-casual Mexican restaurant chain, making it more expensive compared to Chipotle, but less than a full-service restaurant
There has been a wave of bankruptcies in recent months, contributing to the closure of restaurants and shops.
On Monday we reported how BurgerFi – which bills itself as a higher-end McDonald’s – has raised concerns about mass closures after revealing it is considering bankruptcy.
Bosses are eyeing a Chapter 11 bankruptcy, which would allow the company to cancel leases on its worst-performing restaurants and sell off the contents – as Red Lobster did last month.
In fact, Red Lobster closed nearly 100 of them after filing for bankruptcy in May.
National coffee and luxury supermarket chain Foxtrot said in early April it would close all its stores with immediate effect, leaving staff and customers stunned.
Founded in 2014 in Chicago, Foxtrot had 33 locations in the Chicago, Austin, Dallas and Washington DC areas.
Meanwhile, retailer Express, a key part of the shopping centre, filed for bankruptcy in April and said it would close 95 outlets.