59 California Carl’s Jr stores set to close or be sold in bankruptcy
A major Carl's Jr. franchise operator is planning to sell or close 59 restaurants across California after filing for bankruptcy earlier this year. While the change may be barely noticeable in some places, your neighborhood Carl’s Jr. could be one of the affected ones.
The numbers tell the story
Friendly Franchisees Corporation, one of the largest California-based Carl’s Jr. operators, is looking to close 10 locations and sell 49 others. The company is controlled by franchisee Harshad Dharod, who has spent more than two decades building a large Carl’s Jr. footprint across California.
According to reports, the company filed for Chapter 11 bankruptcy protection in April as financial pressures continued to mount.
One of the most surprising details from the bankruptcy filings is that the restaurants were still bringing in significant revenue. The locations reportedly generated more than $6 million in monthly sales. The problem is that they were also reportedly losing more than $600,000 every month.
Why the restaurants are struggling
The company points to several challenges. According to reports, Dharod cited rising operating costs and California's $20-per-hour fast-food minimum wage. He also chalked some of it up to a lack of innovation and support from the Carl's Jr. brand.
Employees also described additional issues, including understaffing, workplace injuries, and difficult customer interactions. Taken together, those pressures created a difficult environment for many of the restaurants.
This isn't a Carl's Jr. shutdown
Before you start worrying about the entire chain, Carl's Jr. says this situation is specific to one franchise operator. The company emphasized that the bankruptcy filing affects Dharod's independently owned restaurants and does not impact other Carl's Jr. locations.
It is also important that some of the 59 restaurants might avoid closing entirely. While 59 restaurants sounds dramatic, many of those locations could continue operating under new ownership. According to reports, there is already interest from potential buyers. In franchise sales, it's common for employees and managers to stay while the restaurant remains open. Nevertheless, the fate of these 59 locations is still being decided.
Source: Fox Business
