Shake Shack announces closure of six California locations due to the new $20 minimum wage, citing unprofitable projections and portfolio adjustments.
Popular restaurant Shake Shack has announced they will be closing 6 California locations after the controversial $20 minimum wage was enacted statewide. The famous burger chain, closing nine stores total, said this is a result of a review of their portfolio and are not projecting positive returns that they would like to see. These closings will bring the total restaurant count in the state of California to 37. Locations in Oakland and Los Angeles will be affected from these closings. This will be the first time the restaurant chain closes locations, not on the basis of construction related.
The other closings will be seen in Texas (2) and Ohio (1). These stores will be closing by the end of September and the employees will have a chance to be rehired at other nearby locations if they choose to, if they do not the employees will receive 60 days of pay. The hiking of minimum wage to $20 has affected many large fast food chains such as; McDonald’s, Burger King, and even In-N-Out Burger. The prices at these restaurants have also seen large increases to combat these increases in minimum wage. At current day, Shake Shack has a market capitalization just at around $4.5 Billion.
