Rubio’s Coastal Grill, a casual Mexican restaurant chain known for its fish tacos, abruptly closed 48 restaurants in California on Friday due to the “rising cost of doing business” in the state, which was exacerbated by a recent fast food minimum-wage increase.
Rubio’s announced on Monday that it had shuttered about one third of its 134 restaurants, leaving 86 locations remaining in California, Arizona, and Nevada. The majority of these stores are based in Southern California.
“The closings were brought about by the rising cost of doing business in California,” said a statement from a Rubio’s spokesperson. “While painful, the store closures are a necessary step in our strategic long-term plan to position Rubio’s for success for years to come.”
The company did not further elaborate on the reasoning for the closures other than to say that its locations were “underperforming” and that the move came after a “thorough review of its operations and the current business climate.”
The decision was made two months after California’s $20 minimum wage for fast-food workers took effect, a 25 percent jump from the current minimum wage of $16 for virtually all other sectors of the state economy. Governor Gavin Newsom signed the new starting wage into law last fall, affecting over 553,000 fast-food employees and chains with at least 60 locations nationwide.
Californians are expected to vote in November on whether the state’s overall minimum wage should be increased to $18 per hour, an increase that could offset some of the financial damage incurred from the wage hike. At the very least, it would bring the statewide minimum wage closer to the one required for fast-food workers.
Since it went into effect April 1, the law has led to raised prices and job cuts across the board in the state. Last month, Red Lobster filed for Chapter 11 bankruptcy after closing dozens of locations. Fast-food chains have also been impacted heavily.
Immediately after the new wage took effect, menu prices at Chipotle rose 6 to 7 percent in the first week of April compared to the same time last year across the fast-food brand’s 500 California restaurants, according to the Wall Street Journal. Likewise, Chick-fil-A saw its prices increase 10.6 percent on average in California since mid-February.
Other chains negatively impacted by the wage increase include McDonald’s, Domino’s, Burger King, Pizza Hut, Jack in the Box, and Shake Shack.
Prior to the wage hike, California restaurants, particularly pizza chains, began laying off delivery drivers and farming out deliveries to third-party apps, as National Review previously reported. Other companies considered raising food prices, slowing hiring, shaving employee hours, and pausing expansion plans or expanding in other states instead, among other actions.
Rubio’s previously filed for Chapter 11 bankruptcy in October 2020 amid the Covid-19 pandemic and restructured its business as a result. At its peak, the food chain had 200 restaurants under its banner.