A major Carl's Jr. franchisee who operates 59 restaurants across California filed for Chapter 11 bankruptcy protection in April and now plans to close 10 locations outright, putting the rest on the market as the iconic West Coast burger chain continues to shrink in the state where it was born.
Franchisee Harsbad Dharod's operation, largely concentrated in Southern California, generated more than $6 million in monthly revenue. But the franchise group has reportedly been losing more than $600,000 per month this year, according to a New York Post report. National Franchise Sales, which is handling the process, said there has already been interest from potential buyers for the remaining locations.
The numbers tell a broader story. Franchise disclosure documents show Carl's Jr. had 613 California locations in 2023. By 2025, that figure had fallen to 588, a net loss of 25 stores in roughly two years. Dharod's bankruptcy and planned closures will deepen that decline.
In court filings, Dharod said the wage hike "materially increased operating expenses." His subsidiary, Sun Gir Inc., blamed California's $20-an-hour fast-food minimum wage for worsening the company's financial distress. Dharod also cited weaker sales, reduced marketing effectiveness, and a lack of innovation from Carl's Jr.'s parent company as contributing factors.
California's fast-food wage mandate, which took effect in 2024, was sold by Sacramento as a win for workers. Franchisees like Dharod are living with the consequences. When labor costs spike and sales soften at the same time, the math stops working, and stores close.
The pattern is not unique to Carl's Jr. Across the fast-food landscape in California, operators have trimmed hours, raised prices, and shuttered locations since the wage law took hold. What lawmakers framed as a raise for workers has, in practice, become a slow-rolling liquidation of the businesses that employed them.
Meanwhile, In-N-Out Burger is planning a new Southern California location inside Irvine's Great Park development, a reminder that some chains are still finding ways to grow in the state, though In-N-Out's privately held, tightly controlled model differs sharply from a franchise operation stretched thin.
SKE Restaurants, Carl's Jr.'s parent company, moved quickly to contain the damage. A spokesperson stated:
"This situation is specific to this individual franchisee's financial and business circumstances. This has no impact on the operations of any other Carl's Jr. locations."
That reassurance may be technically accurate. But when a single operator running 59 locations files for bankruptcy and blames, in part, a "lack of innovation" from the parent company, the corporate brush-off rings hollow. Dharod's court filings point fingers in two directions, at Sacramento and at the chain's own leadership.
The tension between franchisees and corporate parents is a familiar story in American fast food. Franchisees absorb the local regulatory hits, wage mandates, permitting costs, insurance, while corporate sets the menu, the marketing, and the brand strategy. When things go wrong, corporate calls it a local problem. When things go right, corporate takes the credit.
Other burger chains are betting on nostalgia and menu gimmicks to hold customers. Burger King recently revived its Crown Nuggets after a 14-year absence, banking on the pull of familiar flavors. Whether that kind of play could have helped Carl's Jr. hold ground in California is an open question, but Dharod clearly felt the chain wasn't doing enough.
Carl's Jr. traces its roots to 1941, when founder Carl Karcher launched a hot dog cart at Florence and Central avenues in Los Angeles. The chain grew into one of the West Coast's most recognizable fast-food brands, a fixture of Southern California's car-culture dining scene for more than eight decades.
Now, in the state where it started, Carl's Jr. is contracting. The loss of 25 locations statewide between 2023 and 2025 was already notable. Dharod's bankruptcy adds another layer of uncertainty. Ten stores will go dark. Dozens more could change hands, or disappear entirely if buyers don't materialize.
National Franchise Sales reported interest from potential buyers, but the specifics remain unclear. Which locations will close? Which will sell? At what price? None of that has been disclosed publicly. The bankruptcy process will unfold over the coming months, and the answers will matter to the workers, customers, and communities that depend on those restaurants.
The broader trend is hard to miss. Rising costs have already forced the end of Schlitz beer after 177 years of production, another long-running American brand that couldn't outrun the economics. Carl's Jr. isn't dead, but in California, it is bleeding.
Defenders of California's $20 minimum wage argue that fast-food workers deserve a living wage and that profitable corporations can absorb the cost. That argument assumes every franchise operator is sitting on deep reserves. Dharod's filing suggests otherwise. A franchise group pulling in $6 million a month in revenue was still hemorrhaging $600,000 a month in losses.
Revenue is not profit. Margins in fast food are thin on a good day. Stack a mandated wage hike on top of weaker sales and rising input costs, and the gap between revenue and viability widens fast. Court filings don't lie about the bottom line.
The workers at those 10 closing locations won't be earning $20 an hour. They'll be earning nothing, at least until they find new jobs in a market where their former employer's competitors are making the same painful calculations.
Fast-food competition remains fierce nationwide. Wendy's is rolling out limited-time menu items and promotional tie-ins to grab market share. Chains that can adapt and innovate may survive. Chains that can't, or whose franchisees are crushed by regulation before they get the chance, will not.
The bankruptcy process will determine whether Dharod's remaining stores find new owners or simply go dark. SKE Restaurants insists the broader Carl's Jr. brand is unaffected. But a chain that has lost 25 California locations in two years and now faces the potential loss of dozens more cannot pretend the trajectory is healthy.
The specific stores slated for closure have not been publicly identified. Nor has the court handling the Chapter 11 filing disclosed a detailed timeline. For now, the future of dozens of Carl's Jr. restaurants remains uncertain.
Other chains are expanding into new markets while Carl's Jr. retreats from its home turf. White Castle recently planted its flag in Texas with a new standalone restaurant near Dallas-Fort Worth, a chain moving toward opportunity, not away from regulation.
California's political class wanted to mandate prosperity for fast-food workers. What they got instead is a franchisee in bankruptcy court, 10 restaurants going dark, and a founding brand retreating from the state that built it. The policy delivered the opposite of what it promised, and the people who can least afford it are paying the price.