Fast Food Chain Closes Location Following Minimum Wage Hike

Daily Report June 05,2024

Rubio’s Coastal Grill, a famous California Mexican restaurant chain, has announced the closure of 48 of its locations in California due to the state’s new $20-an-hour minimum wage for fast food workers.

The fast food chain, known for its fish tacos, has been struggling financially since the pandemic and had previously filed for bankruptcy protection in 2020.

“The closings were brought about by the rising cost of doing business. Making the decision to close a store is never an easy one,” the restaurant chain announced. “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.

California’s new minimum wage, which went into effect on April 1, requires that fast-food chains pay their workers at least $20 an hour. The new wage is $4 higher than the standard minimum wage for other sectors in California, which is set to rise to $18 an hour in the fall.

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Experts point to the increased minimum wage as a major factor in the closures. Alan Gin, a San Diego Economics professor, said in a statement to the media that the increased wage will hit businesses like Rubio hard.

“The initial thought that came to mind was that they are going to be struck by this increase in the minimum wage for fast food workers from $16 per hour to $20 per hour,” Gin said. “But there are some other issues as well that Rubio is facing. They’ve been having financial difficulties for a long time.”

Rubio's shuts down 48 locations in California, including 24 in SoCal https://t.co/HyO8gr0GYc

— ABC7 Eyewitness News (@ABC7) June 3, 2024

Rubio is not the only restaurant struggling with the wage hike. BurgerFi, an upscale fast food chain, is considering bankruptcy after sparking concerns of mass closures. Red Lobster, a seafood restaurant, has shut almost 100 locations after filing for bankruptcy in May.

On the other hand, Foxtrot, a national coffee and grocery chain, has also shut down its stores with immediate effect.

Ralph Rubio founded Rubio in San Diego in 1983. What started as a taco stand grew to 200 restaurants, mostly across California, before the pandemic.