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Restaurant chain closes almost 50 locations in California after increase in minimum wage

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Rubio’s Coastal Grill, a popular California Mexican restaurant chain, recently made the decision to close 48 of its locations in the state due to rising business costs. The closures were a result of a thorough review of operations and the current business climate, according to the Los Angeles Times. Despite the difficult decision to shut down nearly one-third of its restaurants, the company assured that it was a necessary step in their long-term strategic plan for success. The chain will continue to operate 86 remaining locations in California, Nevada, and Arizona.

The founder of Rubio’s, Ralph Rubio, did not disclose the exact number of employees impacted by the closures. However, the company attributed the decision to employees being “underperforming.” This announcement comes just two months after California implemented a $20-hour minimum wage for fast-food workers, which has had ripple effects throughout the industry. Other restaurant chains, such as Red Lobster, have also faced challenges and had to close down locations nationwide, with California being one of the most affected states.

The wage hikes in California have forced some fast-food chains to terminate workers and make strategic business decisions to mitigate financial losses. Some pizza chains, in particular, have had to cut jobs to avoid potential financial repercussions. The $20 minimum wage law applies to fast-food workers in chains with 60 or more locations across the country. Recent reports indicate that multiple Pizza Hut franchises in California have had to discontinue their delivery services, resulting in job losses for delivery drivers in the state.

Supporters of the minimum wage law argue that many fast-food workers are not just teenagers working part-time jobs, contrary to what opponents believe. The impacts of the wage hikes and business closures in the industry highlight the challenges faced by restaurants in California in recent years, exacerbated by factors such as inflation and the ongoing COVID-19 pandemic. Despite the difficult decisions made by restaurant chains like Rubio’s, they remain optimistic about positioning themselves for long-term success in the ever-evolving business climate.

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