Popular fast-casual chain cuts jobs amid store closures

The American fast-food landscape is undergoing its most significant shift in a decade. 

While convenient dining is still a crowd favorite, with nearly 32% of youth consuming fast food daily as recently as 2023, according to a CDC report, the economics of running such establishments have changed considerably.

Across the country, the fast food industry is grappling with a triple threat: soaring labor costs, rent hikes, and consumers who are growing weary of rising fast-food prices.

In a series of new filings and discoveries from a manual review of California state records, Five Guys Operations has confirmed that it is permanently shuttering multiple locations.

These shutdowns signal that even premium brands with global presence are not immune to the financial pressures of this extremely competitive landscape.

Five Guys joins the California exodus

The latest data reveal that Five Guys is permanently closing four stores across California in May 2026, citing “financial hardship” as the primary driver.

These closures are not minor adjustments and represent a total loss of 55 jobs, affecting everyone from crew members to general managers.

Notably, these workers do not have bumping rights, meaning they cannot transfer to other locations to save their jobs. The layoffs are concentrated in high-density urban areas.

Expert take: the $25 burger ceiling

Industry experts suggest that Five Guys’ current struggles are a symptom of a broader “middler-tier” squeeze.

As prices rise, the gap between value fast food and premium burgers is narrowing, but consumers’ wallets are not expanding to keep pace with inflation.

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“We are seeing a massive correction where the middle-tier brands like Five Guys that sit between fast food and sit-down dining are getting squeezed by a consumer who is watching their wallet,” says Dominick Miserandino, CEO of RTMNexus. 

“When a burger, fries, and a drink hit the $25 mark, the consumer is going to start to lean more towards that value meal even more.”

TheStreet Co-Editor-in-Chief Daniel Kline, who has covered retail for more than 30 years, notes that Five Guys’ reputation for quality may be contributing to its distress. 

“Five Guys has a superior product, but it’s expensive, and there’s not much they can do about that. That’s going to mean some of their locations may not make economic sense,” said Kline.

The fast-food demand vs. cost paradox

The crisis is paradoxical. According to a June 2025 CDC report, roughly 30% of youth ages 2 to 19 still consume fast food on any given day. However, the share of daily calories derived from these meals has declined from 14% a decade ago to approximately 12%.

This suggests that while Americans still want burgers and fries, they are becoming increasingly selective. In California, the stress test started in 2024 with the mandatory $20 minimum wage for fast-food workers. 

Brands cannot operate without further price increases, but in effect stand to lose to lower-cost competitors or home cooking.

This is especially true for Five Guys. It’s part of the fast-casual restaurant category and offers fresh options and higher-quality ingredients. And to ensure this premium quality, its prices are on the higher end among fast-food restaurants.

Five Guys is far from alone. The chain, which boasts over 1,950 locations across 29 countries, including the U.K., Germany, and South Korea, is a part of a larger trend of brands “trimming the fat” in 2026.

• Wendy’s: Intends to close over 300 restaurants in the first half of 2026
• Pizza Hut: Plans to close 250 U.S. locations
• Papa John’s: Will shutter about 300 stores by the end of 2027
• Jack in the Box: Foresees 50 to 100 closures
• Panera Bread: Closing all its Fresh Dough Facilities
  Sources: Business Insider, TheStreet

For the fast-food industry, 2026 is proving a radical year, as it faces increasing international sales and presence alongside reduced demand and financial hardships in home markets.

Related: Another airline cancels flights until June, travelers offered refunds