Overview
- Sun Gir Inc., which filed for Chapter 11 on Friday, said it operates about 59 Carl’s Jr. locations in Southern California and has put 49 California restaurants up for sale.
- The company told the court its outlets have generated roughly $6 million in monthly revenue while losing more than $600,000 per month and falling behind on rent, royalties and other franchise payments.
- Sun Gir asked to use cash collateral to keep about 1,000 employees paid and to cover essential expenses while it seeks court approval to sell units and reject underperforming leases.
- In sworn filings CEO Harshad Dharod blamed the $20 sector wage for sharply higher labor costs and also faulted the franchisor for reduced marketing, weak innovation and executive turnover that hurt margins.
- Independent research from the NBER estimates the wage hike cost roughly 18,000 fast-food jobs in California, and creditors, buyers and the bankruptcy court will now weigh the franchisee’s claims as sales and restructurings proceed.