For years, Andrew F. Puzder, the CEO of CKE Restaurants, the parent company of the Carl’s Jr. and Hardee’s fast-food chains, has been telling the world that while the U.S. government makes life needlessly miserable for businesses, and California, where it has been headquartered, is exponentially worse.
This week, CKE announced that it is moving its headquarters to Nashville, Tennessee. In June 2013, Puzder told the Wall Street Journal that his chain would not expand in California because the state “is not interested in having businesses grow,” noting among many other things that it takes 285 days to get a building permit after signing a lease. This means the chain has to pay rent for over nine months, plus the time needed to build, while not earning any revenues.
Puzder also wrote roughly 15 columns at Human Events in 2012, most of them bemoaning the sluggish U.S. economy and onerous U.S. government policies and regulations.
The company appears to have planned to move its headquarters to Nashville for years. This would explain why it has gone to the franchising model almost everywhere except Nashville. It can use its company-owned stores there to test new menu items and concepts before making them available to franchisees. CKE could have chosen any large metro area for this strategy, including the area surrounding its current California headquarters. But it did not. Nation’s Restaurant News specifically notes that “Among the refranchised units are restaurants in Hardee’s headquarters city of St. Louis and in Santa Barbara County, Calif., where Carl’s Jr.’s home office in Carpinteria is located.” Why did management clearly choose to go elsewhere? Among other things, Puzder told the Journal in 2013 that the Golden State’s labor laws are intolerable.
And Car’s Jr. joins a long list of California companies with an exit strategy. Some of them are big employers. In 2014, Toyota announced plans to move most of the 5,000 managers and employees from Toyota’s Torrance, Calif., headquarters to Plano Texas. Toyota has enjoyed a deep relationship with Texas through its $2.2-billion truck-assembly complex near San Antonio.
And remember many decades ago when General Motors had an assembly plant in Van Nuys. Southern California’s long history as an auto manufacturing center ended in 1992 when a flame-red Chevrolet Camaro rolled off the assembly line, the last of 6.3 million vehicles built there over 45 years. The Van Nuys factory, which also made Pontiac Firebirds, was the last auto plant in Southern California. Its demise -announced to the plant’s 2,600 workers – follows the closure in the early 1980s of a Ford Motor Co. plant in Pico Rivera and a GM plant in South Gate and the 1971 shutdown of a Chrysler Corp. plant in City of Commerce.
A recent published study of “California divestment events” – business decisions to shun the state paint a grim picture. These come in three types: companies that left the state entirely; companies that expanded in other states rather than in California; and a few companies that had planned to grow in the Golden State but changed their minds. The study found records of 1,510 divestment events occurring in California between 2008 and 2014, but that number is an incomplete accounting of the situation. “Experts in site selection generally agree that at least five events fail to become public knowledge for every one that does,” giving rise to the conclusion that the real total is probably more than 9,000 divestment events for this period.
We can say goodbye to number 9001, the Carl’s Jr. headquarters.