The drama inside Carl’s Jr.: Crushed by California costs, crime and competition

Carl’s Jr. began in 1941 as a hot dog cart on the corner of Florence and Central in Los Angeles and grew into one of the region’s best-known burger chains. Eight decades later, the now-global chain is struggling in its old neighborhood.

The high costs of doing business in California, festering labor issues, fierce competition and crime have hit the chain hard in Southern California. Its employees are walking off the job in protest over working conditions, and a top franchisee in the area has filed for bankruptcy protection.

“These guys were first at the party in Southern California,” said Chris Rodriguez, co-founder of DealGround, an AI platform that tracks commercial real estate. “Now, it’s kind of like they’re swimming upstream in every lane.”

The franchisee who controls 59 Carl’s Jr. outlets applied for bankruptcy protection last month, saying he couldn’t pay his bills, blaming California’s $20 minimum wage and Carl’s Jr.’s lack of innovation.

“This distress was driven by a significant increase in labor costs following changes to California law establishing a $20 per hour minimum wage for fast food workers,” the franchisee, Harshad Dharod, said in a filing with a Central District bankruptcy court.

Some of the close to 1,000 employees working for the franchisee say the chain’s efforts to cut costs to the bone have left them overworked, understaffed and exposed to violence.

“It’s a problem from the top. They don’t want to spend,” said Elizabeth Alvarado, a Carl’s Jr. worker in Northridge. “I need my job, and I do the best I can. But, I can only do so much.”

The company Carl’s Jr. blames the franchisee.

“This situation is specific to this individual franchisee’s financial and business circumstances,” a spokesperson for Carl’s Jr. and its parent company, CKE Restaurants, told the Los Angeles Times. “We remain committed to delivering quality experiences for our guests, while driving profitable, sustainable growth for our franchisees and brand.”

The franchisee’s stores, almost all in Southern California, remain in operation as of mid-May.

Whether and how the chain can untangle itself from this knot of blame will help determine whether it can rebound to its former glory in its birthplace as a flagbearer for Californian burger culture or recede into irrelevance.

Carl’s Jr. opened its first sit-down restaurants with expanded menus in Anaheim in 1946. Its smiling yellow star was born in the 1950s and rapidly spread across California throughout the 1970s. In the 1990s, it bought Hardees, and now both chains are run with similar menus and branding by i CKE Restaurants.

While it moved its headquarters from Carpinteria to Tennessee in the last 10 years, its menu still reflects its California origins, with items such as the Cali XL, a classic double cheeseburger. The chain was among the first to spot the meat-free trend and introduced plant-based burgers and the charbroiled turkey burger. In the early 2000s, it made a splash with commercials pointing to its California origins.

The chain’s founder, Carl Karcher, became one of California’s highest-profile business leaders by appearing in the company’s commercials. He was also a conservative and devout Catholic who was a target of women and gay rights activists riled by his opinions about homosexuality and abortion.

The chain drew later criticism for an ad featuring Paris Hilton in a bikini washing a Bentley before taking a bite of a new spicy burger offering. The company stood behind the ad and expanded its suggestive commercials, which later featured Kim Kardashian and Kate Upton.

It hasn’t been all good times. Carl’s Jr. has been subject to labor violations in the past. The company has been repeatedly sued for labor issues and was fined by Los Angeles city officials for wage theft in 2017. City officials found the company failed to pay the proper minimum wage to more than three dozen workers, and ordered Carl’s Jr. to pay $1.45 million.

Today, Carl’s Jr. has just over 1,000 locations in the U.S., most of those in California. Hardee’s has more than 1,800 locations in the country, according to its website.

Like most restaurants, Carl’s Jr. has been struggling to attract customers at a time when many are increasingly concerned about inflation and the health of the economy. Some chains are slashing prices to offer concerned consumers more burger for their buck. Smaller chains can’t compete well in the price wars. Those without a strong brand identity and fan base have been suffering.

The economic strain has rippled through legacy fast-food chains like never before, said Rodriguez, who expects some brands will buckle under the pressure.

Carl’s Jr.’s U.S. network of shops shrank 3% in 2024, according to the company’s franchise disclosure document. Hardee’s network shrank more than 10% between the start of 2023 and the end of 2025. A major Hardee’s franchise operator shuttered 77 locations in December.

Franchisee Dharod told the bankruptcy court that business had become particularly bad in the last two years, leaving him without enough cash on hand to cover wages, rent, supplies and insurance. While his outlets have generated more than $6 million in revenue per month, they have been losing more than $600,000 per month this year.

Without protection from the court and the ability to use his daily cash flow to meet those needs, he could lose his employees and franchise rights, he said.

“If payroll is not paid or vendors cease delivering goods, the debtors would be forced to shut down restaurant operations within a matter of days,” he said in the court document.

Carl’s Jr. workers say they are feeling the heat and have staged multiple walkouts in recent months to bring attention to their concerns. They are not getting the staff, supplies, training or security they need, said Yadeli Caldera, a 22-year-old Carl’s Jr. worker.

She is typically the only person working the overnight shift in Chatsworth and often encounters violent customers. She recalls fearing for her life when one customer was angry about their order.

“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,” Caldera told The Times. “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.”

Some workers say they now have to do the work of multiple people, which is leading to on-the-job injuries.

Workers detailed violent interactions with customers, including robberies and physical assaults, and said the company refused to provide safety training. Angry customers throw drinks at employees, according to complaints filed by workers to Cal/OSHA and the California Labor Commissioner’s Office.

Yolanda Cruz, who has worked at Carl’s Jr. for 20 years, says employees are regularly harassed by customers. One morning a man jumped at her as she tried to enter the restaurant.

“What else can we do? Just pray to God that how we get to work is the same way we return home at the end of the day,” Cruz said to The Times in Spanish. “This is the fear we have all the time.”

Juana Rocha is almost always the sole cook working during her night shift. Her hands work against the clock to manage the grill and fryer, wash dishes, mop the floors, prep the salsa and guacamole, package the food and bag the meals — a job that should be done by at least three people, she said.

“They treat us like animals,” Rocha told The Times during a protest led by the state’s fast-food union. “We’re raising our voice because if we don’t make them hear us, this treatment will never end.”

The franchise operator that filed for bankruptcy runs the branches where workers protested. The operator did not respond to requests for comment from The Times. The Carl’s Jr. spokesperson declined to comment on the staff’s allegations and said the company is not their employer because the stores are independently owned.

The company has been trying to build buzz around the brand this year with a Super Bowl-connected burger giveaway. It returned to its roots with some racy commercials featuring social media star Alix Earle and a cameo from Paris Hilton.

CKE said its Western Bacon Chicken Sandwich has been popular, and a growing number of potential customers have been clicking on its content.

“Carl’s Jr. continues to see positive momentum in marketing efforts that have engaged and attracted new guests,” the spokesperson said.

A higher minimum wage means the chain has to cut back on other costs or convince customers to pay more, said James Vitrano, a restaurant executive who leads efforts to stabilize struggling restaurants for Dorset Partners.

“You’ve got some great burgers in L.A.,” he said. “Nobody really knows where Carl’s Jr. stands anymore.”