California Pizza Kitchen has offered a taste of California’s dining culture to Americans for decades. Rick Rosenfield, one of the chain’s co-founders, recently shared thoughts on his choice of location for starting a business, indicating he might opt for Florida over California if he were to start anew today.
California’s Business Environment
Rosenfield reflected on the positive business climate he experienced in California when launching the restaurant chain with co-founder Larry Flax. Years ago, California boasted an excellent business environment, with year-round good weather, a robust labor market, and favorable demographics and densities. Challenges like snowstorms affecting shopping malls were not a concern at the time.
Today, the situation has shifted. According to Rosenfield, California has become less business-friendly. Rather than sparking economic growth, the state presents challenges, with major companies like Chevron, Oracle, and Tesla relocating their headquarters elsewhere, such as Texas. Texas has reported 157 California companies moving their headquarters to the state between 2015 and 2024.
Impact of California’s Business Climate
Rosenfield attributes this change to various factors that intensified following the COVID-19 pandemic. Labor shortages, heightened regulations, and increased costs, including a new minimum wage law, are significant contributors. As of April 1, 2024, eligible fast-food workers in California must earn at least $20 an hour. Rosenfield suggests that while California Pizza Kitchen typically pays above the minimum wage, these hikes impact overall wage expectations, creating ripple effects throughout the business.
Restaurants frequently operate with slim profit margins. The National Restaurant Association notes that food and labor expenses account for 33% of restaurant sales, while additional costs like utilities, supplies, and fees make up around 29%. This leaves the average restaurant with a pre-tax margin near 5%. Rosenfield warns that businesses often transfer these additional costs to customers, challenging affordability and profitability.
Comparing California and Florida
Rosenfield suggests the difficulties make states like Florida appealing for entrepreneurs. He recently relocated to Florida and noted its business-friendly environment, characterized by reduced bureaucracy. Florida has witnessed robust growth in business formations, with over 561,000 new domestic LLCs filed in 2025, and the third-highest rate of new business applicants per 1,000 residents in 2023.
When asked about Rosenfield’s views, Governor Gavin Newsom’s office humorously remarked on the cultural fit of the company name, emphasizing gratitude for California Pizza Kitchen’s continued presence and substantial restaurant network within the state.
California’s Economic Position
Despite praising Florida’s business environment, Rosenfield acknowledges California’s economic power. The state still offers favorable weather and a strong labor market, yet the restaurant business faces hurdles. Entrepreneurs and other businesses are leaving due to the current environment.
Rosenfield emphasizes the importance of creating a welcoming business atmosphere, urging policy changes that foster entrepreneurial spirit. He believes that unfavorable regulations may deter future entrepreneurs, reducing the state’s economic vitality.
Rosenfield remains hopeful for improvement, advocating for a business climate that supports further growth and success.
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