Popular fast food chain Carl's Jr. is facing mounting pressure in California as soaring labor costs, falling sales and growing safety fears collide in a deepening crisis for franchise operators and workers.
The company, which made headlines last year for hiring TikTok star Alix Earle as the face of its Super Bowl campaign, has quietly reduced its California footprint over the past two years, shrinking from 613 locations in 2023 to 588 stores in 2025, according to franchise documents.
The struggles intensified last month when major Carl's Jr. operator Friendly Franchisees Corporation filed for Chapter 11 bankruptcy protection, impacting roughly 11 percent of the chain's California operations. The franchise company directly blamed California's controversial $20 minimum wage law for fast-food workers, which took effect in 2024 under Democratic state leadership.
But rising labor costs are only part of the pressure facing the chain. Workers and labor organizers say increasingly volatile and dangerous conditions inside some California stores are also driving employees to the brink.
Last week, California Fast Food Workers Union announced strikes at Carl's Jr. locations over what it described as unsafe working conditions, understaffing and wage issues. Employees alleged they are frequently exposed to aggressive behavior, robberies and physical violence while working shifts.
"Nearly every day we're subjected to aggressive and violent behavior by angry customers who yell at us and throw food at us," the union claimed in a statement. Workers also alleged there had been "several violent attacks and robberies" over the past year that left employees "injured and in constant fear."
Among the incidents cited by the union was one case in which a man allegedly threatened to hit an employee with a frying basket before punching her in the face. In another incident, a worker reportedly had cash stolen directly from her hand. "We live in fear just walking to work from the parking lot," the union said.
One worker, in comments shared by the union on Instagram, alleged employees had been subjected to years of chronic understaffing and poor conditions. "I'm on strike at Carl's Jr. because my coworkers and I have experienced chronic understaffing, lack of proper cooking and cleaning supplies, and inadequate personal protective equipment," the employee said. The worker also claimed staff were sometimes required to work off the clock and miss legally mandated breaks. "Some of us here have worked for years and didn't realize Carl's Jr. was violating the law and our rights until we joined the union," the employee alleged.
The worker described conditions inside the store as "humiliating" and claimed employees were forced to work with broken cleaning equipment and inadequate disinfectant supplies. "It's so bad here that there isn't proper disinfectant being stocked at the store, let alone food products," the worker said. The employee further alleged that workers who raised concerns about conditions later saw their hours reduced "without warning and explanation."
The company has not publicly responded in detail to the latest allegations. On the subject of rising costs, CEO and founder Harshad Dharod said the wage increase had "materially increased operating expenses" despite the business continuing to generate millions in sales. In court filings tied to subsidiary Sun Gir, Dharod also pointed to weakening sales, tougher competition and what he described as "lack of innovation at the franchisor level." He said "reduced marketing effectiveness" and executive turnover within the wider Carl's Jr. system had also contributed to operational difficulties.
The operator runs 59 Carl's Jr. locations across California - including 52 in Southern California - and employs roughly 1,000 workers. Court documents showed the business generated approximately $19.9 million in net sales during the first three months of the year, averaging between $6 million and $7 million per month. Despite that revenue, the company still posted a net loss of around $2 million over the same period because of what filings described as "significant ongoing operating expenses." The company also admitted it had fallen behind on rent, royalties and other payments tied to several franchise agreements, putting some locations at risk of termination.
The bankruptcy filing stated the company needed access to cash collateral to continue meeting payroll, purchase food inventory, pay insurance and keep stores operating during the restructuring process.
The Carl's Jr. turmoil comes as California's fast-food wage experiment remains one of the most heavily debated labor policies in the country. The $20 wage deal emerged from a political compromise between organized labor groups and restaurant industry leaders after lawmakers considered an even higher sector-wide wage mandate. Supporters argue the higher pay is necessary to help workers survive California's soaring cost of living. Critics, however, say the policy is accelerating price hikes, reduced hours, automation and financial distress among franchise operators already grappling with inflation and cautious consumers.
The broader quick-service restaurant sector has also faced declining traffic nationwide as Americans cut back discretionary spending. According to Circana data, total consumer spending at Carl's Jr. dropped 4 percent in 2025.
The turmoil highlights the broader pressures facing fast-food operators across California as restaurants grapple with higher wages, inflation, slowing consumer spending and rising security concerns. Industry analysts say chains operating on thin margins are particularly vulnerable. Jonathan Turley, a law professor at George Washington University, said the Carl's Jr. situation reflects wider economic pressures hitting businesses across the state. "California's war on basic economics continues to rack up losses," Turley said.
For Carl's Jr., the challenges are now piling up from multiple directions at once - from shrinking profits and labor unrest to growing fears among workers who say simply getting through a shift has become increasingly dangerous.
