Restaurant Chain With 134 Locations Files For Bankruptcy, Blames California’s New Minimum Wage Law

Rubio’s Coastal Grill has filed for Chapter 11 bankruptcy protection, following the closure earlier this week of nearly 50 California locations, according to a report from Nation’s Restaurant News.

The move, aimed at facilitating the sale of the 41-year-old business, comes as restaurants across the country grapple with the economic challenges brought on by the Biden administration’s policies, often referred to as “Bidenomics.”

Nicholas Rubin, Rubio’s chief restructuring officer, stated that despite efforts to streamline the company, the ongoing economic difficulties have made it hard for Rubio’s to manage its debt.

These challenges include fewer customers due to work-from-home trends, higher food and utility costs, and a significant increase in California’s minimum wage, which jumped by 25% to $20 an hour on April 1.

Rubin believes that a court-supervised sale process is the best way forward for Rubio’s, allowing the brand to flourish in the long run.

The company has secured financing from its lender and plans to sell its assets to an interested buyer, with other companies also having the chance to bid. Throughout this process, Rubio’s will continue to operate and pay its employees, and customers can still use their gift cards and rewards at the remaining 86 locations.

This isn’t the first time Rubio’s has faced financial difficulties.

RELATED: Former Fast Food CEO Warns Massive Restaurant Closings on Horizon

In 2020, the company filed for bankruptcy after closing several locations during the pandemic.

Over the past decade, Rubio’s has closed 48 locations, while its competitors saw an average sales increase of 11% last year.

Ralph Rubio, who founded the company in 1983, will stay with Rubio’s during the bankruptcy process.

In 2015, the chain changed its name from Rubio’s Fresh Mexican Grill to Rubio’s Coastal Grill to focus on seafood and stand out in the crowded fast casual Mexican segment.

Rubio’s is just one of many restaurant chains seeking bankruptcy protection as the industry navigates the post-pandemic recovery, high costs, rising interest rates, and more selective consumers.

READ NEXT: Did Obama Offer Hush Money to Reverend Wright in 2008? Allegations Resurface Amid Trump Conviction

Red Lobster, Party Fowl, Boxer Ramen, Tijuana Flats, Sticky Fingers, Oberweis Dairy, and Foxtrot/Dom’s Kitchen have all filed for bankruptcy this year, with overall U.S. corporate bankruptcy filings reaching a 13-year high.