One of Carl's Jr.'s largest franchise operators in California is shutting down ten restaurants and putting dozens more on the auction block after filing for Chapter 11 bankruptcy protection in April, a concrete, dollars-and-cents consequence of the state's $20-an-hour fast-food minimum wage and what the franchisee describes as a collapsing business model.
Harshad Dharod's franchise group operates 59 Carl's Jr. locations across California, concentrated largely in Southern California. National Franchise Sales, the firm handling the disposition, said Dharod plans to close ten locations outright and market the remaining restaurants to potential buyers. The group once generated more than $6 million in monthly revenue. This year, it has reportedly been losing more than $600,000 every month.
That swing, from millions in revenue to six-figure monthly losses, tells you everything you need to know about what Sacramento's labor mandates are doing to the people who actually run restaurants, hire workers, and keep the lights on.
Dharod's company stated in court filings that California's minimum wage increase had "materially increased operating expenses," contributing directly to the financial distress that forced the bankruptcy. The filings paint a bleak picture of a franchise group caught between rising costs and falling demand.
As the Daily Mail reported, Dharod said in the filings that "business has become particularly difficult over the last two years," pointing to rising labor costs, weaker sales, and what he described as a lack of innovation from Carl's Jr.'s parent company, CKE Restaurants.
That two-year window lines up neatly with the implementation of California's fast-food minimum wage law, which pushed hourly pay to $20 for workers at qualifying chains. Supporters of the law promised it would lift workers out of poverty. For Dharod's employees at ten soon-to-be-shuttered locations, it may lift them out of a job entirely.
Carl's Jr. is not some fly-by-night operation. Carl Karcher launched a hot dog cart at the corner of Florence and Central avenues in Los Angeles in 1941. The chain expanded rapidly through the 1960s and 1970s, building a loyal following around menu staples like the Famous Star and the Western Bacon Cheeseburger. It still operates hundreds of locations across the country and internationally.
But in California, the state where it was born, the chain is shrinking. Franchise disclosure documents show Carl's Jr. had 613 California locations in 2023. By 2025, that number had dropped to 588. Circana data showed spending at Carl's Jr. fell 4 percent in 2025.
The closures tied to California's $20 minimum wage are not isolated incidents. They are part of a pattern visible across the state's restaurant industry, where operators face a combination of mandated labor costs, slowing customer traffic, inflation, and intensifying competition.
CKE Restaurants, Carl's Jr.'s parent company, tried to distance itself from the franchise group's troubles. A spokesman said the situation "is specific to this individual franchisee's financial and business circumstances" and added that it "has no impact on the operations of any other Carl's Jr locations."
That may be technically accurate. But when a 59-store franchise operator, one of the chain's largest in the state, files for bankruptcy and starts liquidating, the ripple effects are hard to contain.
The New York Post reported that Dharod's entity, Sun Gir Inc., filed for Chapter 11 and is seeking to sell 49 California restaurants. The Post also cited a study from the National Bureau of Economic Research estimating that California's fast-food minimum wage hike cost the sector approximately 18,000 jobs, a 3.2 percent decline compared with other regions.
NBER researchers Jeffrey Clemens, Olivia Edwards, and Jonathan Meer wrote:
"Our median estimate translates into a loss of 18,000 jobs in California's fast-food sector relative to the counterfactual."
Eighteen thousand jobs. Not a rounding error. Not a temporary adjustment. A measurable, documented contraction in employment caused by a single state policy, one that Sacramento's political class championed as a victory for working people.
The math is not complicated. When you force a burger restaurant to pay $20 an hour in a market where customers are already pulling back on spending, margins collapse. Owners cut hours, cut staff, or close altogether. The workers the law was supposed to help end up worse off, not because of corporate greed, but because of political arithmetic that ignores how businesses actually operate.
California's restaurant sector is hardly the only industry feeling the squeeze. El Torito's long decline from 187 restaurants to just 21 offers another case study in what happens when an industry faces relentless cost pressure in a hostile regulatory environment.
The financial strain has not been the only headache for Carl's Jr. in California. Fast-food workers and union organizers have staged protests at some locations, alleging chronic understaffing and unsafe working conditions. Labor groups cited reports of workers being punched by customers, threatened with kitchen equipment, and robbed while on duty.
Those are serious allegations. But the irony is thick: the very wage mandates that labor organizers pushed for are now accelerating the closures that leave fewer jobs and thinner staffing at the restaurants that remain open. Understaffing is what happens when operators can't afford to hire at the rates Sacramento dictates.
It is worth noting that CKE Restaurants did not publicly respond to the specific labor allegations in the available reporting. Whether the parent company addresses those claims going forward may matter for the chain's broader reputation.
National Franchise Sales said there has already been interest from potential buyers for Dharod's remaining locations. That suggests the Carl's Jr. brand still has value, just perhaps not enough value to overcome the cost structure California imposes on anyone trying to run a restaurant there.
The franchise group's troubles arrive at an awkward moment for Carl's Jr.'s corporate brand. The chain recently hired TikTok star Alix Earle as the face of its Super Bowl campaign, a bid to attract younger customers. Splashy marketing campaigns look a bit hollow when your largest California franchisee is liquidating stores.
The broader exodus of businesses and wealth from California is well documented. Texas recently overtook California as the top state for Fortune 500 headquarters, a shift driven by the same taxes, regulations, and cost burdens that are squeezing franchise operators like Dharod.
For now, the future of dozens of Carl's Jr. restaurants remains uncertain as the bankruptcy process unfolds. Whether buyers step up, and at what price, will determine how many of those 59 locations survive under new ownership, or disappear from the California landscape altogether.
Several open questions remain. Which ten locations will close? Which cities lose their restaurants? How many workers are affected? The court filings referenced in reporting do not provide those specifics, and CKE Restaurants has not offered them. The workers and communities left waiting for answers deserve more transparency than they have received so far.
Meanwhile, California's wealthy continue to flee for states like Florida, taking their capital and their tax revenue with them. The people who can't leave, the hourly workers, the small franchisees, the families who depend on neighborhood restaurants, are the ones stuck paying the price for Sacramento's policy experiments.
California built a $20 minimum wage and called it compassion. Harshad Dharod's bankruptcy filing is the receipt.