Shake Shack shutters 6 California locations after $20 min wage hike

( Post Millennial )

After California Gov. Newsom signed the $20 minimum wage hike into law which took effect in April, there have been mass layoffs and business closures within the restaurant industry. Shake Shack, a popular burger joint, is the latest to announce the impact the law has had on its operations. It is now set to close six of its California locations as a result.

This includes five locations in Los Angeles and one in Oakland, which are expected to be shuttered by Sept. 25, said Shake Shack.

The burger chain declined to provide specifics on why these locations were closing but said in a Tuesday filing with the Securities and Exchange Commission that the decision came after a review of its company-operated units.

"These Shacks are not projected to provide acceptable returns in the foreseeable future," the filing said, adding that its decision amounted to "changes in the trade area," as per the New York Post.

This marks the first time Shake Shack is shutting down locations that were not related to construction. The company, which has a market capitalization of $4.5 billion, said employees can be hired at other Shake Shack locations or receive 60 days of pay.

Despite the minimum wage increase only recently taking effect, the California restaurant industry has already taken the hit. Nearly 10,000 jobs were slashed within the first two months.

The first big chain to be affected by the new regulation was Rubio's California Grill, which is well-known for its fish tacos. At the end of May, just one month after the law took effect, 48 of its approximately 134 sites were closed. The closures were attributed to the state's "rising cost of doing business." The chain filed for bankruptcy.

Other well-known restaurants, such as McDonald's, Burger King, and even the Golden State's famous burger chain In-N-Out Burger, had to raise prices to make up for the increased pay. Many were forced to reduce employee hours, and some transitioned to automation.

As restaurants are being forced to shutter; however, a report from the California Labor Industry shows that new fast-food jobs have been added each month. Shake Shack has more than 330 restaurant locations in the US and 180 abroad.