(TheLastPatriotNews.com) – In a direct consequence of California’s recently implemented $20 minimum wage for fast-food workers, Shake Shack has announced the closure of six locations in the Democrat-run state, seemingly crushed by the new requirement.
The famed burger joint’s decision is part of a broader strategy to close nine locations nationwide, as indicated in a recent Securities and Exchange Commission filing.
“These Shacks are not projected to provide acceptable returns in the foreseeable future,” the filing declared, cited by The New York Post.
Most of the locations slated for closure are situated in the Los Angeles area, with one in Oakland.
This will reduce the total number of Shake Shacks in California to 37.
The company attributed the closures partially to changes in the trade area surrounding these locations.
When questioned about the impact of the minimum wage law, Shake Shack chose not to comment further.
This marks the first instance of Shake Shack closing locations for reasons other than construction.
The news, initially reported by Restaurant Business, also noted that additional closures are planned in Texas and Ohio.
All affected restaurants are expected to cease operations by September 25.
Shake Shack has offered reemployment opportunities at other locations for the displaced staff. Those who opt not to transfer will receive compensation for 60 days.
Despite these closures, Shake Shack, which operates 330 locations in the U.S. and over 180 internationally, does not anticipate these changes affecting its expansion plans in the affected regions.
The $20 minimum wage increase in California has led other major fast-food chains, such as McDonald’s, Burger King, and In-N-Out Burger, to increase prices to manage the higher wage costs.
Some chains have reduced employee hours, while others are exploring increased automation.
Rubio’s California Grill, for instance, closed 48 locations and filed for bankruptcy, attributing its decision to the escalating costs of doing business in California.
Governor Gavin Newsom defended the wage increase, stating, “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 highlighted the resilience of the state’s economy and its labor market in face of criticism.
Additionally, Rob Lynch, the newly appointed CEO of Shake Shack, expressed his desire to reposition the brand as a family favorite, not just catering to high-income consumers.
He emphasized the need for more drive-thru facilities to alter its image from being predominantly an urban, walk-in establishment.
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