Shake Shack is shutting down nine locations across the U.S., with six of those closures happening in California.
The burger chain announced this move in a recent SEC filing, stating these spots weren’t expected to turn a profit anytime soon.
This decision comes as California’s fast-food scene faces big changes.
The state recently bumped up the minimum wage for fast-food workers to $20 an hour.
While Shake Shack didn’t directly point to this wage hike as the reason for the closures, it’s worth noting that other chains like Rubio’s and Blaze Pizza have also closed up shop in the Golden State lately.
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Running a fast-food joint in California isn’t easy. Rent has always been high, and now labor costs are through the roof. It’s a tough mix that’s putting the squeeze on many businesses.
But not everyone sees doom and gloom.
Shake Shack to shut 6 California locations, including 5 in LA, after state’s $20 minimum wage hike https://t.co/53201ux8RD pic.twitter.com/nNbES08Nm8
— New York Post (@nypost) August 28, 2024
Governor Gavin Newsom’s office claims fast-food hiring is actually up, with 11,000 new jobs added since the wage increase kicked in on April 1, 2024.
Newsom seems pretty pleased about this. He recently said, “What’s good for workers is good for business, and as California’s fast food industry continues booming every single month our workers are finally getting the pay they deserve.”
He also took a swipe at critics, adding, “Despite those who pedaled lies about how this would doom the industry, California’s economy and workers are again proving them wrong.”
For Shake Shack, these closures are a first.
They’ve never had to shut down stores like this before, except for construction-related reasons.
The company seems to be spinning this as a smart business move.
In their SEC filing, they said these closures would “optimize the Company’s footprint” and “maximize profitable growth.”
They also mentioned they don’t plan on closing any more stores “for the foreseeable future.”
Shake Shack @shakeshack promises that by 2025, their leadership will be 50% Black. They also boast about ensuring more women and Black people got promotions.
In other words, they will discriminate against White people.
How is this legal? pic.twitter.com/Koj8bKfOK7
— Libs of TikTok (@libsoftiktok) August 29, 2024
Shake Shack isn’t leaving its workers high and dry, though.
Employees at the closing stores can either transfer to other locations or get a compensation package worth up to 60 days of pay.
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The real question is: will this trend of closures continue, or will businesses find a way to adapt to government mandated higher costs?
