Popular Restaurant Chain Rubios Closing 48 Locations in California Due to “Rising Cost of Doing Business”

by J Pelkey
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Popular restaurant chain Rubio’s Coastal Grill is closing 48 locations in California, citing the “rising cost of doing business” in the state.

In September, California’s Democrat Governor Gavin Newsom signed a law raising the minimum wage for fast-food workers to $20 per hour.

“Eighty percent of the workforce, these fast food places – 80 percent of people of color, two thirds…are women, the majority are breadwinners and we have the opportunity to reward that contribution, reward that sacrifice and stabilize an industry in turn. What a remarkable moment,” Newsom during the bill signing.

CBS News reported:

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Rubio’s Coastal Grill, a beloved restaurant chain known for their fish tacos, has announced that they will be closing 48 locations in California due to the “rising cost of doing business.”

“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.”

Of the 48 locations, which represent about a third of the Rubio’s found in California, Nevada and Arizona, 24 are in the Los Angeles area, 13 are in San Diego — where the company is headquartered — and 11 in Northern California.

The decision has caused disappointment amongst residents who enjoy the “Fresh Mex” style of food, but experts say it’s not surprising — especially after minimum wage jumped from $16 to $20 an hour.

UCLA economist Brian Wheaton says this is the exact type of company that’s vulnerable to increased costs of any nature. 

“Those business that are … not doing very well, near the shutdown margin, this increase in costs when they try to pass it on their consumers, … it may be the thing that pushes them over the edge into a situation where they go out of business,” Wheaton said. ” I think that’s the sort of thing we’re seeing in the case of Rubio’s.”

The company has not yet disclosed how many workers are losing their jobs with the abrupt decision. 

Wheaton says the disturbing trend is just that, with about 10,000 fast food workers losing their jobs in the last nine months in the Golden State.

“What the research tells us is that once you get up to higher minimum wages and large increases, for example going from $16 to $20 in one jump, that’s when we tend to see pretty large or larger disemployment effects,” he said. 

As CBS News noted, more than 10,000 fast food workers have lost their jobs in California as a direct result of the minimum wage increase.

Also, in response to the wage increase, several chains have raised their prices. Burger King increased prices for items such as the Texas Double Whopper meal and the Big Fish Meal, while In-N-Out Burger raised prices for burgers and soft drinks. Hart House, owned by Kevin Hart, also raised prices for milkshakes, sandwiches, and large fries. Although Chick-fil-A, McDonald’s, and Wendy’s have not yet raised prices, it is anticipated they may do so.

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