Hell’s Kitchen chef and television personality Gordon Ramsay is just the latest business owner to leave the Golden State for the Lone Star State. As of June, nineteen businesses had fled California for Texas in 2021 alone, with one of the most prolific companies being Elon Musk’s Tesla auto manufacturing business, with Tesla headquarters relocating to Austin, TX.
Ramsey joins Musk as well as Aeromax Industries, Charles Schwab, Hewlett Packard, Oracle, and Pabst Brewing Company, among others.
In August, Forbes pondered on the reasons businesses as well as many residents are leaving California in droves. California has seen its first ever reduction in population size in 2020; the state lost a Congressional seat due to the drop in residents. In fact, between 2000 and 2020, California’s population fell by 182,000 people.
Economists created a study regarding the exodus of businesses in the Golden State, and they found that businesses were relocating to other parts of the United States, namely Texas, at a rate of six businesses per month. The economists at Stanford University, who conducted the study, noted that this number may not include smaller, lesser-known businesses.
As another part of their study, these experts found that the chief reason businesses are leaving California are due to high taxes, the legal environment in the state (in California, employees are able to file civil suits in such a manner that has resulted in less worker protection but instead in costly lawsuits filed by overzealous attorneys), the multitude of business regulations in the state, and the high cost of living in California.
Ramsay plans to relocate his North American restaurant headquarters to Las Colinas, Texas. He plans to open eighteen restaurants across the country.
However, the company’s projected plan is to open seventy-five restaurants, with some restaurants in the Dallas/Fort Worth area of Texas. However, these restaurants aren’t likely to open until late 2022 or early 2023.
Some of the initial restaurant openings will take place on the East Coast of the country and in Chicago.
Ramsay’s Hell’s Kitchen restaurant, the only one of his restaurants to carry the same name of Ramsay’s popular reality television show, is located in Las Vegas.
The Dallas Morning News confirmed Ramsay’s move to Texas last week.
Many of the businesses relocating from California to Texas have centered themselves in Austin, the state capital and a city that is slightly left of the rest of the traditionally conservative Lone Star state. However, Ramsay plans to move his headquarters to an area near Dallas. Some posit that Ramsay is moving his restaurant’s headquarters to Dallas because of the presence of other restaurant franchises, such as TGI Fridays, Chili’s and Dickey’s Barbeque.
However, the Dallas newspaper reported that Ramsay believed “Dallas is the best place to find chef and restaurant support talent.”
California has lately become a place that seems unfriendly to businesses both small or major in nature. Regulations in the state are some of the most cumbersome in the United States. Many businesses have to pay licensing fees or permit fees for the least of changes to a current location or to initially procure a location.
One restaurant in California had to request – and pay for – a permit to simply pour a concrete sidewalk between his business and the parking space near his establishment. These permits and licensing fees are costly, and business owners need permits for nearly everything.
Another possible reason for businesses leaving the Golden State is the imposition of heavy regulations on businesses during the pandemic. Some business owners have lamented that they lost their business during the lock-downs. Others have lost a business due to the civil unrest during the summer of 2020.
Elon Musk, the CEO of Tesla, has been vocal about his opinion of the draconian California business regulations. Musk relocated his company earlier in 2021, and many of his employees have left the state to move to Texas as well. That was a big blow to California, considering Tesla was at the forefront of electric vehicle technology.
When Musk decided to pull out of the Golden State, he reminded the world via Twitter that Tesla was the last “carmaker” left in California.
Reports show that businesses are leaving California with Texas being the most popular relocation area; however, many companies are moving to Tennessee or Arizona. Each of these states is considered conservative or Republican states.
California is not the only Democratic-run state to see an exodus of businesses; New Jersey (who possesses the highest tax rate, topping California), New York, Michigan and Illinois are all seeing businesses leave for more business-friendly states.