California Pizza Kitchen has long been a staple in the dining culture of the United States. One of the chain’s co-founders, Rick Rosenfield, expresses regret about starting in California. Today, he might choose Florida instead.
Change in Business Environment
Rosenfield and his partner, Larry Flax, founded California Pizza Kitchen when the state’s business environment was favorable. Reflecting on that period, Rosenfield remembers it as an ideal place to establish a business, noting great weather and a skilled labor force.
“We have 365 days a year of great weather,” Rosenfield said.
But, the situation has changed. Significant companies such as Chevron, Oracle, and Tesla have relocated their headquarters away from California. The Texas Comptroller’s Office reports 157 companies made the move to Texas between 2015 and 2024.
Post-Pandemic Shifts
Rosenfield attributes the change in California’s business climate to factors arising after the COVID-19 pandemic. These include labor shortages, regulatory burdens, and rising costs, including an increase in the minimum wage. From April 2024, fast-food workers in California must earn at least $20 per hour.
The restaurant chain often paid above minimum wage, but Rosenfield points out the broader impact. He explains that raising the wage floor prompts expectations for pay increases throughout the ranks. This pressure can be challenging as restaurants typically operate on slim margins, supported by data from the National Restaurant Association.
Restaurants spend about 33 cents of every dollar on food and labor. Additional costs account for around 29% of sales, leaving a small pre-tax margin of about 5%.
Changing Business Preferences
Rosenfield’s critique extends to the impact of higher business costs on consumers. Businesses might raise their prices to cope with increased operational expenses. Consequently, the cost burden shifts to the customers.
“It’s a customer that pays more,” Rosenfield stated.
For entrepreneurs, states like Florida appear more attractive as they face fewer bureaucratic hurdles. Rosenfield has relocated to Florida and praises its business-friendly environment. In 2025, Florida reported over 561,000 new domestic limited liability companies. This success reflects a trend sustained over recent years.
California’s Economic Landscape
Governor Gavin Newsom’s office responded lightheartedly to Rosenfield’s comments, highlighting that California remains a key base for California Pizza Kitchen. More than half of the chain’s restaurants are located there.
Despite the more challenging environment, Rosenfield still acknowledges California’s strengths. He hopes the state will regain its business allure.
Rosenfield argues that reforming policies could foster entrepreneurship and prevent further business migration. He remains optimistic about improvements in California’s economic policies.