A fast-casual staple in San Diego County since its founding in San Diego 40 years ago, Rubio’s Coastal Grill has abruptly shuttered 48 of its California restaurants — 13 of them in San Diego County.
The decision, which took both customers and employees by surprise, was driven by the rising cost of doing business in California, the company said in an emailed statement. Rubio’s, like other California chains, has been affected by the recent wage increase for fast-food employees, who are now paid $20 an hour as of April 1. That represents a 25 percent hike over the current $16 minimum wage in California.
“Making the decision to close a store is never an easy one,” said the statement provided by Strick and Company, a crisis management firm Rubio’s is using to communicate with the media. “The closings were brought about by the rising cost of doing business in California. 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.”
The closures, which were effective as of Friday, account for one-third of all Rubio’s restaurants
The affected restaurants in San Diego are spread throughout the county, from Chula Vista to San Marcos. With the closures, there are now 29 restaurants remaining in San Diego County, including the original location on Mission Bay Drive in Pacific Beach that opened in 1983 as an homage to the original Baja California-style fish taco.
Even with 86 remaining Rubio’s outlets in California, Arizona and Nevada, the chain is a fraction of what it once was. A little less than four years ago, the company that boasts it’s the home of the original fish taco, had as many as 170 locations in the U.S.
In a highly competitive, low-margin market chock full of Mexican-themed brands, San Diego restaurant analyst John Gordon says that Rubio’s was no longer the cool kid on the block.
“Rubio’s is an older tired brand. It’s not cool anymore. Chipotle’s is cool, Cava is cool,” Gordon said. “Rubio’s had its day but once it left the publicly traded markets and (current owner) Mill Road Capital took it over, it went into maintenance mode. Ralph Rubio, the founder, continued to consult with them but nothing much happened.”
The biggest factor, though, fueling this latest evolution of Rubio’s, says Gordon, is the minimum wage hike for fast-food employees, thanks to legislation signed into law last year by Gov. Gavin Newsom. Some fast-food chains already have raised their menu prices in response to the wage increase.
“Without a doubt, the governor’s action, the union’s action on this Assembly bill action that dramatically raised the minimum wage to $20 with no phasing in was a dramatic shock to all fast-food restaurants in California,” Gordon said. “We knew it was coming, and the industry opposed it aggressively.”
According to an article in the trade publication Restaurant Business, Rubio’s has struggled noticeably in the past five years. The company, it wrote, averaged a 1.1 percent decline in overall sales during that time period, compared with a 10.4 percent increase for fast-casual Mexican chains in general.
Gordon said he wouldn’t be surprised to see Rubio’s forced into bankruptcy considering the potential debt it is facing from the closure of so many leased locations.
It wouldn’t be the first time.
In October 2020, the privately held Rubio’s filed for Chapter 11 protection to get out from under more than $100 million in liabilities. It already had closed a number of locations as it faced mounting debts and difficulty paying rent. And then, as the pandemic worsened, Rubio’s opted to not reopen 26 of its locations across California, Arizona, Colorado and Florida.
A pre-negotiated plan for restructuring the company’s substantial debt of more than $72 million was later approved by the U.S. bankruptcy court judge not long after the initial filing. As part of the plan, Rubio’s longtime lender agreed to provide $52 million in so-called “exit” financing. In addition, Mill Road Capital agreed to invest $6 million back into the company.
A company spokesperson confirmed that the locations below have been closed in San Diego County:
- 1480 Eastlake Parkway, Suite 901, Chula Vista
- 419 Parkway Plaza, El Cajon
- 1485 E. Valley Parkway, Suite A-6, Escondido
- 9500 Gillman Drive, Food Court, La Jolla
- 9187 Clairemont Mesa Blvd., Suite 7, San Diego
- 910 Grand Ave., San Diego
- 8935 Towne Centre Drive, Suite 100, San Diego
- 9254 Scranton Road, Suite 105, San Diego
- 2260 Callagan Highway, Building 3187, San Diego
- 7835 Highlands Village Place, Suite D101, San Diego
- 1158 W. San Marcos Blvd., Suite A, San Marcos
- 437 Highway 101, Suite 117, Solana Beach
- 1711 University Drive, Suite 110. Vista
Rubio’s workers had little advance warning of the restaurant closures. No formal notice was granted under what’s known as the Worker Adjustment and Retraining Notification Act, which requires a company — defined as an industrial or commercial facility — with 75 or more employees that is engaging in a mass layoff to notify its workers. However, the wording of the law is a little unclear as to how it applies to a company like Rubio’s where there are multiple locations, each typically employing far fewer than 75 workers.
San Diego labor attorney Dan Eaton said Tuesday that it’s highly unlikely Rubio’s flouted the law given that each restaurant would probably be treated as “a commercial facility” and therefore would not have enough employees to trigger noticing requirements.
On the online social forum Reddit, a number of Rubio’s employees complained that they did not receive advance notice of their termination, although one Reddit post noted that workers did receive their final paychecks upon learning that their place of employment was closing.
A spokesperson with the state Department of Industrial Relations advised any workers who did not receive their full pay upon closure of the restaurants to file a claim with the state.
