Major CA Fast Food Chain Closures Loom, Bankruptcy Filing Shows

The bankruptcy of one of California’s largest Carl’s Jr. franchise operators is raising fresh questions about the future of the burger chain in its home state amid rising labor costs, and declining sales.

This month, potential store closures weigh on the company’s largest market. Friendly Franchisees Corporation, which calls itself California's largest Carl’s Jr. operator, filed for Chapter 11 bankruptcy protection in April along with several affiliated entities tied to founder Harshad Dharod. Together, the companies operate 59 Carl’s Jr. locations across the state and employ roughly 1,000 workers, Fast Company reported.

Carl’s Jr. operated 588 California locations in 2025, down from 613 in 2023. Consumer spending at the chain also reportedly fell 4% last year, MassLive reported.

Now, court filings show the company is seeking to reject leases at 10 underperforming restaurants, a move that could lead to closures or sales of the locations as part of its restructuring efforts.

The following locations were identified in the latest court documents, according to Fast Company:

• 19400 Ventura Blvd, Tarzana
• 165 E. Duarte Road, Arcadia
• 573 N. Azusa Ave, Covina
• 140 E. Foothill Blvd., Pomona
• 16815 Devonshire St., Granada Hills
• 18756 Sherman Way, Reseda
• 1000 Farmers Lane, Santa Rosa
• 141 S. Diamond Bar Blvd., Diamond Bar
• 485 Rosemead Blvd., Pasadena
• 505 W. Las Tunas Dr., San Gabriel

In bankruptcy filings, the franchisee said the locations — some of which have operated for decades — have struggled financially since California’s $20 minimum wage for fast-food workers took effect in April 2024.

• Related: CA's $20 Minimum Wage For Fast-Food Workers May Have 'Consequences': Report

Sun Gir Inc., the lead debtor in the case, said the restaurants have faced rising operating costs, increased competition and weakening sales, leaving some locations operating at steep losses.

The company said its restaurants collectively generate more than $6 million in monthly revenue but have been losing more than $600,000 per month this year, Restaurant Dive reported.

One Arcadia location alone reportedly lost more than $400,000 over a two-year period, Fast Company reported.

The bankruptcy reflects broader challenges facing Carl’s Jr. in California, where the chain has already seen declining store counts and weakening sales.

Workers at some Southern California Carl’s Jr. locations have also complained about understaffing, inadequate training and unsafe working conditions. Employees interviewed by the Los Angeles Times described violent encounters with customers, including robberies and physical assaults, while accusing franchise operators of cutting costs too aggressively.

One employee at a Chatsworth location told the Times about an experience she had with a customer who was angry about his order. She was working alone on the overnight shift.

“He started yelling in my face, hit his car horn and seemed like he was about to get out of his car to come towards me,” she said. “It’s scary, because if an emergency happens, what do I do? What if I’m already dying on the floor? I don’t have someone else with me. I’m alone.”

Carl’s Jr. parent company CKE Restaurants has sought to distance itself from the bankruptcy, saying the financial issues are limited to a single franchise operator and do not reflect the overall health of the brand, the Times reported.

The company has not said whether additional locations could close as the bankruptcy process continues. Bids for some restaurants are expected later this summer, with a potential auction scheduled for August, Fast Company reported.

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