MJP –
It was an idea for a meal that screamed California.
Spring break in Baja California was the moment that San Diego college student Ralph Rubio found fish tacos. He helped bring national attention to fish tacos in 1983 when he launched a small walk-up stand. In the past decade, his firm, which is now known as Rubio’s Coastal Grill, has expanded to over 200 locations in California and other states.
However, the corporation was hit hard by the epidemic, and as a result, it closed its eateries in Florida and Colorado. In the cutthroat fast-casual market, Rubio’s has also been fighting for attention from Mexican food behemoth Chipotle. Then there were the expenses, such as higher food costs and wages for workers.
More than a third of Rubio’s already-slimmed-down chain of 134 restaurants—48 in California—closed on Friday, as the company acknowledged on Monday.
The increasing expense of doing business in California was cited by Rubio in a statement released Monday by media consultant Sitrick & Co. as the reason for the closures.
Some employees were shocked to hear about the layoffs, but the corporation just indicated that the employees were “underperforming.” This action was taken two months after the state’s minimum wage of $20 per hour for fast-food workers went into effect.
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A “thorough review of its operations and the current business climate” led to the decision, according to the company’s statement. According to a representative from Sitrick, no executive from Rubio’s office would be available for comment.
The closure is the most recent indicator of trouble in the restaurant industry, which has been hit hard by inflation and rising labor expenses.
Last month, following the closure of dozens of stores, the legendary seafood chain Red Lobster, which operates in the casual dining market, filed for Chapter 11 bankruptcy.
There has been a noticeable decline in business at restaurants as well, especially among those with lower incomes. Since spending their economic stimulus cheques has reduced their savings, many Californians have taken on further debt, contributing to the state’s rising unemployment rate.
Although Rubio did not disclose the exact number of layoffs, numerous employees expressed their dismay at the lack of notice and even reported receiving phone calls informing them of their termination over the weekend.
According to Rubio, the 86 stores that are still open in the states of California, Arizona, and Nevada will continue to operate.
Mill Road Capital, a private equity group, bought Rubio’s out for $91 million in 2010 and took it private. A full reorganization and bankruptcy filing were made by the corporation in the autumn of the first year of the pandemic in 2020. At the time, Rubio’s team also blamed rising prices, pointing to minimum wage hikes in particular.
The original names of Rubio’s were “Rubio’s Baja Grill” and “Rubio’s Fresh Mexican Grill.”
In 2015, it underwent its present transformation into Rubio’s Coastal Grill.
Alan Gin, an economics professor at the University of San Diego Knauss School of Business, said, “Rubio changed its name to emphasize seafood and differentiate itself from Chipotle, the monster in the room.”
“Considering all these closures, it seems like the name change wasn’t significant,” he remarked.
“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,” Rubio stated in a brief Monday statement.
