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The stifling effect of the regulatory state

by The Oklahoman Editorial Board Published: June 19, 2013

The Carl's Jr. fast-food chain has enjoyed considerable and consistent growth in the 13 years that Andy Puzder has been CEO of its parent company, CKE Restaurants. Puzder anticipates more growth to come, although not in California, where CKE has its headquarters.

Blame the Golden State's regulations and red tape, which can strangle a company. Puzder put it this way to The Wall Street Journal: “California is not interested in having businesses grow.”

He offered a few examples. After signing a lease in Los Angeles, it takes on average 285 days for one of his restaurants to obtain a building permit. In Texas, the wait is 60 days. Even in Russia, the wait is only about half as long as in LA. “I can open up a restaurant faster on Karl Marx Prospect in Siberia than on Carl Karcher Boulevard in California.” (Karcher founded Carl's Jr.)

California's labor rules are another nightmare. Puzder said CKE Restaurants has spent $20 million in the past eight years on damages and attorney fees tied to class-action lawsuits. So the company is looking elsewhere to expand, like Europe and states in the Northeast. It intends to open 300 more restaurants in Texas by 2020.

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