Fans and employees of Rubio’s Coastal Grill were shocked when the store announced the closure of 48 of its locations. While Rubio’s plans to keep its remaining 86 locations operational, it will be doing so while undergoing Chapter 11 bankruptcy–the company’s second bankruptcy filing in less than four years–and restructuring. According to Nicholas Rubin, Rubio’s Chief Restructuring Officer, this will include a court-supervised sale process as the brand’s current owners seek to sell the brand. This is seen as the company’s best path toward long-term success.
Assets, Liabilities, and Previous Bankruptcies
Some experts have placed blame on rising operational costs, including the increase of California’s minimum wage from $16 to $20 per hour. Rubio’s had previously filed for bankruptcy in 2020, however, and the brand had already significantly decreased from its one-time peak of 170 locations.
“Those businesses that are… not doing very well, near the shutdown margin,” says UCLA economist Brian Wheaton, “this increase in costs when they try to pass it on to their consumers… it may be the thing that pushes them over the edge into a situation where they go out of business… I think that’s the sort of thing we’re seeing in the case of Rubio’s.”
The brand’s current bankruptcy petition revealed liabilities of an amount between $100 million and $500 million owed to nearly 25 thousand creditors, compared to assets of only between $10 million and $15 million. The Rubio’s brand itself placed the blame on challenging economic conditions in California.
“The closings were brought about by the rising cost of doing business in California,” a Rubio’s spokesperson said in a statement. “While painful, the store closures are a necessary step in our strategic long-term plan to position Rubio’s for success in years to come.”
Employees Left Out of Luck and Out of Cash
As part of the Chapter 11 bankruptcy proceedings, Rubio’s has been the subject of frozen accounts, leaving employees frustrated, confused, and unpaid. Some employees who have attempted to claim their final paychecks have been unable to do so.
“I really don’t feel that we deserved that,” said Cynthia Jacoba, who had worked at a Rubio’s in Northern California for four years. “There should have been some kind of notice. There’s people that I know that were there 15 to 25 years… I’m not the only one this is happening to, you know? I’ve been hearing across the board that either they didn’t get their checks or some people didn’t get paid all their hours.”
Angry by a lack of notice and lack of payment that has only increased the financial burden of their sudden unemployment, the only recourse out-of-luck employees have been provided is to file claims with a bankruptcy court in Delaware. Any payment employees receive will take time, and the amount of the payment is not guaranteed.
Closed Stores and Continuing Operations
Many locations have closed in California, Nevada, and Arizona, including 24 in Los Angeles, 13 in San Diego, and 11 in Northern California. This has left some employees of these locations struggling to obtain their final paychecks. However, many other Rubio’s locations will remain operational. The company, which is still led by co-founder Ralph Rubio, has stated its intention to continue operations in its remaining locations, where employees will continue to be paid.
