Bed Bath & Beyond Will Not Open Stores in California Amid Business Climate Concerns

Bed Bath & Beyond has announced it will not open any stores in California, citing the state’s challenging business environment as a significant factor in its decision. The retail chain’s Executive Chairman, Marcus Lemonis, criticized California’s regulatory landscape, stating it creates an “overregulated, expensive, and risky environment for businesses.”

This announcement follows Bed Bath & Beyond’s bankruptcy filing in 2023, after which the brand’s assets were acquired by Overstock.com and rebranded as Beyond Inc. The company has since reopened its first store in Nashville and plans to establish 75 locations nationwide by 2026, but California will not be among them. Customers in the state will only have access to online shopping for the brand’s products.

Lemonis emphasized the difficulties businesses face in California, including high taxes and stringent regulations. He stated, “It’s harder to employ people, harder to keep doors open, and harder to deliver value to customers.”

California has been criticized for having the worst business climate in the nation, according to a report from the California Policy Center (CPC). The report highlights that since 2020, over 500 companies, including major firms like Google and Chevron, have either left or reduced their operations in the state due to high taxes and rising costs.

The CPC noted that California has the highest sales tax rate in the country at 7.25 percent, the highest income tax rate at 13.3 percent, and the sixth-highest corporate income tax rate at 8.84 percent. Additionally, the state imposes the highest fuel tax, which raises transportation costs for businesses.

Critics of the state’s policies argue that laws decriminalizing property theft, such as Proposition 47, have exacerbated issues for retailers. Shoplifting and other theft-related crimes have surged, prompting some retailers to lock up basic necessities. Walgreens, for instance, closed five stores in San Francisco in 2021 due to rising theft costs.

In April 2024, California’s minimum wage for fast-food workers will increase from $16 to $20, a move projected to result in approximately 9,600 job losses in that sector within the first year. This decision has drawn criticism from business leaders who argue that it will further strain the state’s economy.

Lynsi Snyder, owner of In-N-Out Burger, recently announced the relocation of her company to Tennessee, citing difficulties in raising a family and conducting business in California. Snyder remarked, “There’s a lot of great things about California, but raising a family is not easy here. Doing business is not easy here.”

Despite the concerns raised by business leaders, California Governor Gavin Newsom’s office responded dismissively to Lemonis’ criticisms. A spokesperson stated, “After their bankruptcy and closure of every store, like most Americans, we thought Bed, Bath & Beyond no longer existed. We wish them well in their efforts to become relevant again as they try to open a 2nd store.”

The CPC’s report also points out that while California boasts the highest GDP in the nation, it simultaneously faces the highest unemployment rate, lowest job growth, and highest poverty rate. The state’s budget is projected to face significant deficits, and it has been ranked as the worst state to do business for ten consecutive years by Chief Executive magazine.

As Bed Bath & Beyond opts out of California’s market, the decision raises questions about the state’s ability to attract and retain businesses. Observers suggest that unless there are significant policy changes, California may continue to see companies exit, impacting job creation and economic growth.