In a statement, the fast-casual restaurant chain said the decision to close 48 locations in California came in part because of the rising cost of doing business in the state.
Rubio’s Coastal Grill has shuttered 48 locations in California as of Friday. According to several reports from employees on Reddit, the closures came as a surprise. The Carlsbad-based company said in a statement that the decision to close these restaurants came in part because of the current business climate in the state, while also citing the locations’ underperformance.
“Making the decision to close a store is never an easy one … The closings were brought about by the rising cost of doing business in California. 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.”
Though not cited directly, "current business climate in the state" could in part be referencing California's AB 1228 law, which went into effect April 1.The law raised the minimum wage to $20 an hour, equating to a 25% increase from the previous minimum wage. Since, several chains have raised their menu prices, while some operators have vowed not to consider the state for expansion. In January, two California-based Pizza Hut franchisees laid off delivery workers ahead of the hike.
That said, Rubio’s had its struggles prior to April 1. One location had fallen significantly behind on rent payments, Sacramento’s ABC 10 reported. In late 2020, the fast casual concept filed for Chapter 11 bankruptcy protection, after closing over a dozen locations during the pandemic. According to Technomic Ignite data, Rubio’s closed seven locations in 2023 versus 2022. In the past three years, its footprint has shrunk by 7%, while in the past 10 years, it’s closed 48 locations – a nearly 25% retrenchment. Sales also stagnated last year, while its categorical competitors increased sales by over 11% on average.
Of the 48 units closed last week, 11 were in Northern California, 24 were in the Los Angeles market, and 13 were in San Diego. Rubio’s is keeping 86 stores in California, Arizona, and Nevada open.
Rubio's was acquired by private-equity firm Mill Road Capital in 2010 for $91 million. In 2015, the concept chanted its name from Rubio’s Fresh Mexican Grill to Rubio’s Coastal Grill as part of a renewed focus on seafood. At the time, Ralph Rubio, who founded the concept in 1983, said the move would differentiate Rubio’s from the crowded fast casual Mexican segment.
Contact Alicia Kelso at [email protected]
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