The drama inside Carl's Jr.: Crushed by California costs, crime and competition

"The franchisee who controls 59 Carl's Jr. outlets applied for bankruptcy protection last month, saying he couldn't pay his bills, blaming California's $20 minimum wage and Carl's Jr.'s lack of innovation. "This distress was driven by a significant increase in labor costs following changes to California law establishing a $20 per hour minimum wage for fast food workers," the franchisee, Harshad Dharod, said in a filing with a Central District bankruptcy court."

"Some of the close to 1,000 employees working for the franchisee say the chain's efforts to cut costs to the bone have left them overworked, understaffed and exposed to violence. "It's a problem from the top. They don't want to spend," said Elizabeth Alvarado, a Carl's Jr. worker in Northridge. "I need my job, and I do the best I can. But, I can only do so much.""

""These guys were first at the party in Southern California," said Chris Rodriguez, co-founder of DealGround, an AI platform that tracks commercial real estate. "Now, it's kind of like they're swimming upstream in every lane." The high costs of doing business in California, festering labor issues, fierce competition and crime have hit the chain hard in Southern California."

""This situation is specific to this individual franchisee's financial and business circumstances," a spokesperson for Carl's Jr. and its parent company, CKE Restaurants, told the Los Angeles Times. "We remain committed to delivering quality experiences for our guests, while driving profitab"

Carl's Jr. started in 1941 as a hot dog cart in Los Angeles and grew into a major burger chain. In Southern California, the chain is struggling due to high operating costs in California, labor problems, intense competition, and crime. Employees have walked off the job over working conditions. A top franchisee operating 59 outlets filed for bankruptcy protection, citing inability to pay bills. The filing attributes distress to increased labor costs after California set a $20 per hour minimum wage for fast food workers and to Carl's Jr.'s lack of innovation. Employees report being overworked, understaffed, and exposed to violence as the franchisee cuts costs.

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