Freddy’s Frozen Custard & Steakburgers is moving forward with aggressive expansion plans in California, despite rising labor costs and a new $20 fast-food minimum wage that has prompted other restaurant chains to scale back operations in the state [1]. CEO Chris Dull defended California's business climate, stating that the state 'gets a bad rap' and highlighting its high population densities as a key advantage for restaurant brands [1]. Dull emphasized that California has historically been a strong market for restaurants, offering significant volume and customer opportunities [1].
This expansion comes as other chains are reducing their presence in California. For example, one of Carl’s Jr.'s largest franchisees is closing 10 locations and selling 49 others, affecting a total of 59 restaurants, after filing for Chapter 11 bankruptcy protection earlier this year [1]. Additionally, longtime California restaurateur Mike Georgopoulos described the state's business environment as increasingly challenging, saying that businesses are 'working for peanuts' and facing 'sticker shock' due to rising costs [1].
In contrast, Dull sees the current market conditions as an opportunity for Freddy’s. He noted that when competitors exit or close locations, it creates openings for expanding brands to enter and grow their footprint [1]. Freddy’s, which operates more than 500 restaurants nationwide, plans to open 60 new locations this year, with a particular focus on Northern California to build regional density [1]. Dull explained that California's size allows for targeted regional growth, unlike smaller states where statewide presence is necessary for success [1].
Freddy’s already has a handful of locations in California, and the expansion aims to increase its presence in a market dominated by established players like In-N-Out Burger [1]. Dull also mentioned that the company adjusts its pricing based on local market conditions, though specific details were not provided in the article [1].
CONCLUSION
Freddy’s Frozen Custard & Steakburgers is bucking the trend of restaurant pullbacks in California by pursuing significant expansion in the state. While some competitors are closing locations due to rising costs, Freddy’s sees opportunity in the current environment and is targeting growth, particularly in Northern California.