Fast-casual restaurant chain Rubio’s Coastal Grill closed 48 California locations, citing rising costs of doing business in the state after a law required higher pay for some workers.
The Carlsbad, California-based company that specializes in Mexican-style fare and is best known for its fish tacos, said it decided to close 48 underperforming locations in California effective May 31, but will keep 86 restaurants open in that state as well as Arizona and Nevada.
A full statewide list of closings was not immediately available, but the company said 11 of the closed locations are in Northern California, 24 are in the Los Angeles area and 13 are in its corporate hometown region of San Diego. The closings came “after a thorough review of its operations and the current business climate,” according to a company statement.
“The closings were brought about by the rising cost of doing business in California,” the company stated. “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.”
Founded in San Diego in 1983 by Ralph Rubio, the company is majority-owned by private equity firm Mill Road Capital. Rubio’s has been gradually closing restaurants since emerging from a bankruptcy filing in 2020, when it said its business was hit hard in the early months of the COVID-19 pandemic.
The company has closed more than a quarter of its restaurants since 2018, according to industry consulting firm Technomic, and its remaining restaurant count is less than half its count five years ago. The company at one time had expanded into Florida and Colorado but withdrew from those regions in mid-2020 as it struggled with sales nationally.
Several restaurant chains have reported declining sales in recent months as consumers cut back on non-essential spending, with fast-food firms like McDonald’s and Burger King moving to add lower-priced items to their menus to lure customers.
Restaurant industry groups said fast-food and fast-casual chains were further impeded by a California law that took effect April 1, requiring operators with 60 or more U.S. locations to pay workers at least $20 per hour, above the state’s general minimum of $16 per hour.
Proponents of the increase, including labor and community advocacy groups, said the raise was needed to ensure fast-food workers can make a living wage in a state with some of the nation’s highest living expenses.