Rubio's files for Chapter 11 bankruptcy after closing 13 locations in San Diego
What are the broader economic issues that have been affecting Rubio’s, as noted by economists and the company itself?
Rubio's Coastal Grill has been facing several economic challenges that have affected its business operations. Some of these issues include:
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Diminishing in-store traffic: The company has experienced a decline in the number of customers visiting their restaurants. This has been attributed to work-from-home practices that were implemented during the COVID-19 pandemic and have remained in place, reducing the footfall at physical locations.
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Rising food and utility costs: The cost of food and utilities has been increasing, putting pressure on the company's expenses. This has made it more difficult for the business to maintain profitability, particularly in locations where sales have been declining.
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Increases to the minimum wage in California: The state of California has been gradually increasing the minimum wage, which has had a significant impact on businesses like Rubio's that rely on low-wage workers. The increase from $16 per hour to $20 per hour has been particularly challenging for the company to absorb.
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Financial difficulties: Rubio's has been facing financial challenges for a long time. In 2015, the company had 193 locations nationwide, but it has since closed about a third of those. The recent closures of underperforming locations are part of the company's ongoing efforts to address these financial difficulties.
These factors, combined with the impact of the COVID-19 pandemic, have contributed to Rubio's decision to file for Chapter 11 bankruptcy and close several locations in California. The company is currently undergoing a court-supervised sale process, which it expects to be completed within 75 days. Despite these challenges, Rubio's plans to continue operating its remaining 86 restaurants in California, Arizona, and Nevada, with co-founder Ralph Rubio still involved in the business.
Will Ralph Rubio continue in his role at the company during the restructuring and sale process?
Yes, Ralph Rubio, the co-founder of Rubio's Coastal Grill, will continue in his role at the company during the restructuring and sale process. He will provide his usual inspiration and energy going forward, as stated in the news release.
What is the expected timeline for the court-supervised sale process that Rubio’s is entering?
Rubio's expects the court-supervised sale process to be completed within 75 days.