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.”

“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 determine whether it can rebound to its former glory in its birthplace as a flag bearer for California 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 Hardee’s, and now both chains are run with similar menus and branding by CKE Restaurants.

Although 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 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.

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.

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 restaurants shrank 3% in 2024, according to the company’s franchise disclosure document. The Hardee’s network shrank more than 10% from 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. Although his outlets have generated more than $6 million in monthly revenue, 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.

Workers detailed violent interactions with customers, including robberies and physical assaults, and said the company didn’t 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.