Chain Restaurant Crippled By Minimum Wage Hikes, Forced to Close 40 Locations

Rubio’s Coastal Grill, a California Mexican restaurant chain, announced the closure of 48 restaurants in the Golden State amid rising business costs.

The Los Angeles Times reported that the chain decided to shutter nearly one-third of its restaurants following a "review of its operations and the current business climate."

"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 restaurant chain announced Monday.

The company will continue to operate 86 remaining locations across California, Nevada, and Arizona. Ralph Rubio, who started the business, did not disclose how many employees were let go. The company said locations were "underperforming."

The decision comes two months after California implemented a $20-hour minimum wage for fast-food employees. Other restaurant chains have struggled in the state amid wage hikes, inflation, and other negative factors that have compounded since the COVID-19 pandemic.

Last month, the seafood restaurant chain Red Lobster announced it would auction off over 50 locations nationwide. California and Florida lost the most locations, with five each.

Several California fast-food locations terminated workers ahead of the $20 minimum wage law that took effect on April 1. Some eateries, particularly pizza chains, began cutting jobs in an effort to avoid possible financial repercussions.

The wage law applies to workers in fast food chains with 60 or more locations around the nation. Last year, multiple Pizza Hut franchises in California filed notices to comply with the Worker Adjustment and Retraining Notification Act, saying they were discontinuing their delivery services.

Many of the services were delivery driver jobs. In December, Southern California Pizza Co. announced layoffs of around 841 drivers across the state.

The moves will impact Pizza Hut locations in Los Angeles, Orange, San Bernardino, Riverside, and Ventura counties. Supporters of the minimum wage law have said many workers in fast food restaurants are not teenagers working their first job, an image being portrayed by opponents, they claimed.