Rick Rosenfield, co-founder of California Pizza Kitchen, stated that if he were to start a new business today, he would opt for Florida over California due to the latter's increasingly difficult business environment. Rosenfield cited rising labor costs, increased regulation, and a general shift away from business-friendliness as primary concerns.
"If it were me today, I would open in Florida before I would open it in California," Rosenfield told Fox News Digital. "I think it has a lot going for it. The difference is [it's] very business friendly and California is less business friendly today, and they make it apparent."
Rosenfield recalled that when he and co-founder Larry Flax established California Pizza Kitchen over 40 years ago, the business climate in California was highly favorable. He described it then as "the greatest place to do business," highlighting the state's advantageous weather, labor pool, demographics, and population density. However, he noted that this is no longer the case.
He pointed to the impact of the COVID-19 pandemic, which he believes exacerbated existing challenges in California, including labor shortages, heightened regulations, and escalating costs. A significant factor cited is the minimum wage increase that took effect in California on April 1, 2024, mandating a $20.00 per hour wage for eligible fast-food workers. Rosenfield explained that even though his restaurants typically paid above minimum wage, such increases create a ripple effect, leading to demands for raises from other staff members as well.
Rosenfield emphasized the thin profit margins common in the restaurant industry, noting that data from the National Restaurant Association indicates food and labor costs often account for about one-third of sales, with other expenses making up another significant portion. This leaves restaurants with a slim pre-tax margin, often around 5%.
To counteract rising costs, businesses are often compelled to increase prices, which ultimately affects consumers. "The mantra is, well, 'We're going to tax businesses.' 'We're going make the businesses pay more.' But it isn't just the businesses that pay more, it's a customer that pays more," Rosenfield said.
Rosenfield, who relocated to Florida two years ago, described the Sunshine State as "a very business-friendly state" with less bureaucracy compared to California. Florida has seen a substantial influx of new business filings, with over 500,000 new domestic limited liability companies (LLCs) filed in 2023, marking the fifth consecutive year of such high numbers. In 2023, Florida also ranked third nationally in new business applicants per 1,000 residents.
While acknowledging California's status as an economic powerhouse with enduring advantages like good weather and a strong labor base, Rosenfield maintained that it has become less accommodating for businesses, particularly in the restaurant sector. He expressed hope that California will adopt policies that foster a more welcoming environment for entrepreneurs, warning that a continuous focus on business-unfriendly legislation could deter future generations of business owners.
Governor Ron DeSantis's office has previously highlighted Florida's appeal to businesses, citing policies such as the absence of a state income tax as a contrast to what they term "destructive policies" in other states, which they argue drive wealth and companies to Florida. Meanwhile, a spokesperson for California Governor Gavin Newsom's office commented on Rosenfield's remarks by stating, "Florida Pizza Kitchen doesn’t have the same ring to it. We are proud that they are headquartered here and that nearly half of all their restaurants nationwide are in California."