A beloved Mexican fast food chain shuttered four dozen locations in California because of the “rising cost of doing business” in the state — just two months after Gov. Gavin Newsom imposed a $20 minimum wage.
Rubio’s Coastal Grill, known for its fish tacos, closed 48 underperforming stores in the Golden State as of May 31, while keeping 86 stores in California, Arizona and Nevada open, the privately-owned chain said in a statement.
“The closings were brought about by the rising cost of doing business in California,” a spokesperson for the restaurant chain told The Post on Tuesday.
“Making the decision to close a store is never an easy one. 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.”
Business leaders point to the state’s $20 per hour fast food minimum wage, which took effect April 1, as a major new pressure point for companies operating in the state.
The higher wage 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.”
Companies including McDonald’s and Chipotle warned that the increased labor costs would be passed on to the consumer by hiking menu prices.
Rubio’s, which began as a modest walk-up taco stand founded by Ralph Rubio in San Diego in 1983, has faced considerable economic headwinds in recent years.
The intense competition in the fast-casual space posed by the likes of Chipotle cut into its market share.
The pandemic also dealt a blow to the company, forcing it to cut down its size from more than 200 locations to 134.
In the fall of 2020, the company filed for bankruptcy protection and underwent a restructuring. Rubio’s said at the time that rising operating costs including an increased minimum wage was to blame.
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