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The Decline of Rubio’s: A Casualty of the Rising Costs in California’s Fast-Food Industry

Rubio’s Coastal Grill closes 48 California locations due to rising costs. Challenges in the fast-food industry lead to strategic restructuring.

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Fish tacos with flaky white fish, shredded cabbage, tomato, sauce, and shredded cheese sit on a plate with three lime wedges. Rubio's
Fish tacos with flaky white fish, shredded cabbage, tomato, sauce, and shredded cheese sit on a plate with three lime wedges. by Michelle Frechette is licensed under CC-CC0 1.0

In a recent announcement that sent shockwaves through California’s fast-food landscape, Rubio’s Coastal Grill disclosed its decision to close 48 “underperforming” locations across the state. Citing the “rising cost of doing business” and the challenging “current business climate” in California, the beloved fish taco chain is the latest casualty in an industry grappling with economic pressures.

The closures, concentrated in key regions such as Los Angeles, San Diego, and Northern California, underscore the harsh realities faced by businesses in the state. With nearly 80% of Americans now viewing fast food as a luxury, the landscape has become increasingly challenging for restaurants like Rubio’s.

One significant factor in this decision is the recent implementation of California Assembly Bill 1228, which raised the minimum wage for fast-food workers from $16 to $20 an hour. While Rubio’s did not explicitly mention the law in their statement, the broader impact of such legislation on operating costs and profitability is clear.

Founded in 1983 by Ralph Rubio, the chain’s journey from a single San Diego location to a multi-state presence was an inspiring success story. However, the pandemic-induced challenges of 2020, coupled with bankruptcy filings and subsequent closures in Florida, Utah, and Colorado, signaled a turbulent period for the once-thriving brand.

The spokesperson’s acknowledgment of the painful but necessary nature of these closures reflects a strategic pivot towards long-term viability. By consolidating operations and focusing on a leaner footprint, Rubio’s aims to secure its future and uphold its legacy amidst challenging market conditions.

As Rubio’s navigates this critical juncture, loyal customers and industry observers alike will be watching closely to see how the brand adapts and evolves in response to these seismic shifts. The story of Rubio’s serves as a poignant reminder of the relentless pressures facing businesses in today’s fast-paced and unforgiving economic landscape.

While the closure of these locations may mark the end of an era for some, it also represents a new chapter in the ongoing saga of Rubio’s Coastal Grill—a story of resilience, adaptation, and the enduring pursuit of success in the face of adversity.

Read this article from KTLA. https://ktla.com/news/california/rubios-restaurant-closures/

Refer to this KTLA article for more information: https://ktla.com/news/california/rubios-restaurant-closures/.

https://stmdailynews.com/category/food-and-beverage

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Economy

Debunking the Myths: California’s New Minimum Wage Law and Its Real Impact on Fast-Food Jobs

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cook standing in food truck and giving burger
Photo by Kampus Production on Pexels.com

Recently, a narrative has emerged in the media, suggesting that California’s new minimum wage law is devastating the fast-food industry, leading to massive job losses. However, this claim, largely propagated by the California Business and Industrial Alliance (CABIA) and certain conservative media outlets, fails to stand up to scrutiny. In fact, the data tells a very different story.

The Controversial Claim

CABIA placed a full-page ad in USA Today, asserting that nearly 10,000 fast-food jobs had been lost since Governor Gavin Newsom signed the minimum wage increase into law in September. The ad claimed that various fast-food chains were either cutting jobs or raising prices in response to the wage hike, which raised the minimum wage for fast-food workers to $20 from $16 starting April 1. Business lobbyist Tom Manzo pointed to these figures as evidence of the law’s negative impact.



The Reality Check

The truth, however, diverges significantly from these claims. According to data from the Bureau of Labor Statistics (BLS) and the Federal Reserve, fast-food employment in California actually increased from September through January. Furthermore, employment continued to rise after January, reaching nearly 7,000 more jobs in April 2024 compared to April 2023.

Misleading Statistics and Misrepresentation

The source of the 10,000 job loss figure can be traced back to an article in the Wall Street Journal, which reported a 1.3% decline in fast-food employment between September and January. However, this figure was derived from non-seasonally adjusted data, which is problematic for tracking jobs in industries like fast-food that experience seasonal employment fluctuations. Seasonally adjusted data provides a more accurate picture and, when examined, does not support the claim of massive job losses.

The Broader Economic Context

It’s crucial to consider the broader economic landscape of the fast-food industry. While labor costs are certainly a significant expense, they are not the sole challenge facing these businesses. Inflation in food costs, for instance, has been a more pressing issue in recent years. For example, Chipotle Mexican Grill reported an increase in costs for food, beverages, and packaging from $2.6 billion in 2022 to $2.9 billion in 2023. Despite higher labor costs, Chipotle and other chains like El Pollo Loco have managed to maintain or even reduce their labor costs as a percentage of revenue.

The Rubio’s Coastal Grill Case

One notable case often cited in discussions about the minimum wage law is Rubio’s Coastal Grill, which closed 48 of its California locations. While rising operational costs were a factor, the primary driver behind these closures was the chain’s significant debt burden. Acquired by the private equity firm Mill Road Capital in 2010, Rubio’s faced mounting debt that led to its bankruptcy filing in 2020 and again in 2023. This high debt load, a common feature of private-equity takeovers, complicated the company’s path to profitability far more than the minimum wage increases.

The Real Impact

The claim that the new minimum wage law is costing jobs in the fast-food sector is not supported by the available data. Employment in California’s fast-food industry has actually grown, and the broader economic context suggests that other factors, such as food cost inflation and debt burdens from private equity ownership, play a more significant role in the financial health of these businesses.

In conclusion, while the fast-food industry does face challenges, the narrative that California’s minimum wage law is leading to massive job losses is a misleading one. It is important to rely on accurate, seasonally adjusted data and consider the full economic picture when evaluating the impact of such legislation.

Check out the article about the topic of California’s Minimum Wage law and the false narratives that have sprung up regarding it that was posted in the LA Times.

https://www.latimes.com/business/story/2024-06-12/the-fast-food-industry-claims-the-california-minimum-wage-law-is-costing-jobs-its-numbers-are-fake

Visit STM Daily News for more articles and stories, ranging from current events and world news to in-depth analyses and intriguing features; stay informed and entertained with our diverse and engaging content.

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Salvation Army Research Finds Food Bank Usage on the Rise as Food Security Challenges Persist

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TORONTO /CNW/ – New research from The Salvation Army Canada finds that many Canadians continue to struggle to meet their basic needs with food affordability, inflation and housing security challenges persisting as top issues.

As one of the largest non-governmental direct providers of social services in Canada, The Salvation Army produces the biannual Canadian Poverty and Socioeconomic Analysis to better understand the attitudes, behaviours and experiences of Canadians on issues such as the availability of housing and food, general affordability and related health outcomes.

Salvation Army
New research from The Salvation Army Canada finds that many Canadians continue to struggle to meet their basic needs. (CNW Group/The Salvation Army)

Due to overwhelming feedback from policymakers, news media and other stakeholders, The Salvation Army will now produce the Canadian Poverty and Socioeconomic Analysis twice a year, in the spring and fall. This will allow The Salvation Army to quantify the demand for ongoing social services provided and help the organization to better serve those in need.

The most recent research shows Canadians rank health care, inflation and food affordability as their top concerns. These findings are in line with The Salvation Army’s internal data, which reveal households that were inactive in reaching out for help are now active, and the number of new households seeking assistance, such as food, clothing, furniture and emergency housing, is on the rise.

The report finds that 26 percent of Canadians polled continue to be extremely concerned about having enough income to cover their basic needs, and that concerns around food security are on the rise. While seven percent of respondents said they recently accessed a food bank, food hamper or community meal program (up from six percent in October 2023), the percentage of first-time users is up sharply, to 61 percent compared to 43 Percent in October 2023.

“The increase in first-time users of food banks is an alarming indicator of the conditions that many Canadians are facing,” said Lt-Colonel John Murray, territorial secretary for communications, The Salvation Army in Canada and Bermuda. “We often find that when people show up at a food bank it can be the tip of the iceberg for additional issues they may be facing. The Salvation Army is committed to a holistic approach in supporting people through partnerships that help create a positive impact on individuals and families.”

The number of respondents who said they had skipped or reduced the size of at least one meal increased to 26 percent, up from 21 percent previously (October 2023). More Canadians also said they’d bought less nutritious food to save money and had reduced their grocery bill to pay for other necessities.

On financial issues, 72 percent of respondents described challenges managing limited financial resources in the past year, including cutting back on non-essential needs (59 percent), changing habits to save money (52 percent) and using savings or going into debt to afford basic needs (36 percent).

“Despite easing inflation numbers, life is still difficult for many Canadians,” said Murray. “Food insecurity is just one symptom facing people today. At The Salvation Army, our vision is to reduce barriers and address the root causes of poverty, working together with people to achieve their goals in overcoming them.”

Last year, more than three million visits were made to The Salvation Army in Canada and Bermuda for assistance, including 2.1 million visits for food, clothing or practical help, 438,000 visits for Christmas food hampers and toys, and 3.2 million community meals.

Survey Methodology:

This report contains findings from research conducted by Edelman Data & Intelligence on behalf of The Salvation Army to uncover Canadians’ attitudes and experiences with poverty and related socioeconomic issues.

The study was conducted March 11-14, 2024, among a nationally representative sample of 1,515 Canadians who are members of the online Angus Reid Forum, balanced and weighted on age, gender and region. Note: Canadians living in Yukon, Northwest Territories and Nunavut were not included in the survey.

For comparison purposes only, a probability sample of this size would carry a margin of error of +/- 2.5 percentage points, 19 times out of 20. And, where a margin of error is not available, the research department provides a comparable one so that the audience can have some context to the value of the poll.

About The Salvation Army:

The Salvation Army is an international Christian organization that began its work in Canada in 1882 and has grown to become one of the largest direct providers of social services in the country. The Salvation Army gives hope and support to vulnerable people in 400 communities across Canada and in more than 130 countries around the world. Its community and social service activities include: hunger relief for individuals and families through food banks and feeding programs; shelter for people experiencing homelessness and support for those needing housing; rehabilitation for those struggling with substance-use recovery; long-term care and palliative care; Christmas assistance, such as food hampers and toys; after-school programs, camps and school nutrition programs for children and youth; and life-skills classes, such as budgeting, cooking for a family, and anger management. When you give to The Salvation Army, you are investing in the future of people in your community. 

News releases, articles and updated information can be found at https://salvationarmy.ca/
A list of regional media representatives can be found at: https://salvationarmy.ca/news-and-media/media-contacts/

SOURCE The Salvation Army

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Kroger, Albertsons, and C&S Announce Updated Divestiture Plan to Boost Competition

Kroger, Albertsons, and C&S announce an updated divestiture plan to enhance competition in overlapping regions.

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Kroger, Albertsons Companies, and C&S Wholesale Grocers have recently announced an updated and expanded divestiture plan as part of their proposed merger. This new plan is a response to concerns raised by antitrust regulators regarding the original agreement and aims to enhance competition in overlapping regions.

The amended divestiture package includes an increase in the number of stores, facilities, and banner names to ensure that C&S can operate competitively after the merger is complete. The companies are confident that this updated plan will strengthen their position in regulatory challenges and court proceedings related to the proposed merger.

Rodney McMullen, Chairman and CEO of Kroger, expressed his satisfaction with the updated package, emphasizing that it maintains Kroger’s commitments to customers, associates, and communities. Importantly, McMullen assured that no stores will close as a result of the merger, and all frontline associates will remain employed with existing collective bargaining agreements, healthcare and pension benefits, and bargained-for wages intact.

The proposed merger between Kroger and Albertsons aims to provide meaningful benefits to consumers, associates, and communities across the country. It aims to expand access to fresh, affordable food and create a compelling alternative to large, non-union retailers. By adding a well-capitalized competitor to new geographies, the merged company seeks to secure the long-term future of unionized grocery jobs.

Eric Winn, CEO of C&S, expressed confidence in the expanded divestiture package, stating that it will ensure the continued success of the stores and enable C&S to serve communities for generations to come. He also mentioned the excitement of welcoming storied banners, quality private label brands, and experienced retail associates into the C&S family.

Under the amended agreement, C&S will acquire a total of 579 stores, an increase of 166 stores from the original plan. Furthermore, C&S will license the Albertsons banner in California and Wyoming, as well as the Safeway banner in Arizona and Colorado. Kroger will re-banner the retained Albertsons and Safeway stores in these states following the merger’s completion. The divestiture plan includes a range of states and locations, ensuring a well-rounded presence for the newly formed company.

To support the additional stores conveyed to C&S, the updated divestiture package includes increased distribution capacity, larger facilities, and expanded transition services agreements. This will enable C&S to operate the divested stores competitively and cohesively. All fuel centers and pharmacies associated with the divested stores will remain operational.

The amended agreement includes the divestiture of private label brands to C&S and provides access to other major private label brands. This will allow the combined company to offer a wide range of products and options to customers.

The proposed merger is subject to customary closing conditions, including regulatory clearance, and the completion of the merger between Kroger and Albertsons. Upon fulfilling these conditions, C&S will pay Kroger an all-cash consideration of approximately $2.9 billion.

The merger aims to bring lower prices and more choices to customers, improve wages and comprehensive benefits for employees, and invest in ending hunger in communities across America. Kroger and Albertsons remain committed to defending the merger in court and unlocking its numerous benefits.

To learn more about the combined company’s commitment to customers, associates, and communities, visit the website www.krogeralbertsons.com.

About Kroger:
The Kroger Co. is dedicated to its Purpose: To Feed the Human Spirit™. With nearly half a million associates, the company serves over 11 million customers through a seamless digital shopping experience and retail food stores under various banner names. Its goal is to inspire and uplift with food, while also creating communities that are free from hunger and food waste.

The story is based on a press release that includes forward-looking statements. It is recommended that readers refer to the filings made by Kroger and Albertsons with the Securities and Exchange Commission to get a better understanding of the risks and uncertainties that may affect the proposed transaction and updated divestiture plan.

https://ir.kroger.com/news/news-details/2024/Kroger-Albertsons-Companies-and-CS-Wholesale-Grocers-LLC-Announce-an-Updated-and-Expanded-Divestiture-Plan/default.aspx

Source: The Kroger Co.

https://stmdailynews.com/category/lifestyle/business

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