Bed Bath & Beyond Ditches Bad-For-Business California

Bed Bath & Beyond recently announced that it “will not open or operate” any stores in California, a decision that carries significance for both the brand and the state of California.

This iconic American retail chain has made memorable moments for many. My husband and I registered there when we got engaged over a decade ago, and their ubiquitous 20 percent-off coupons were a welcome sight in my mailbox.

After filing for bankruptcy in 2023 and closing all its stores, it was online retailer Overstock.com that stepped in to acquire the brand’s assets, rebranding them as Beyond Inc. Fortunately, Bed Bath & Beyond emerged from its bankruptcy and reopened its first store in Nashville this year. The company plans to open 75 locations across the nation by 2026, excluding California. Customers in California can only shop online for its products.

In a recent press release, Executive Chairman Marcus Lemonis explained the decision, pointing to California’s challenging business climate: “California has created one of the most overregulated, expensive, and risky environments for businesses in America. It’s a system that makes it harder to employ people, harder to keep doors open, and harder to deliver value to customers.”

Lemonis went on to point out that the state’s “higher taxes, higher fees, higher wages that many businesses simply cannot sustain, and endless regulations that strangle growth. Even when the state announces a budget surplus, it’s built on the backs of ordinary citizens who are paying too much and businesses who are squeezed until they break.”

In conclusion, Lemonis has decided that his company will not participate in California’s failing system, which undermines customers and shareholders. Lemonis has extensive experience running successful businesses. In addition to Bed Bath & Beyond, he serves as the CEO of Camping World and Good Sam Enterprises, and he’s recognized for his role on CNBC’s reality TV show, The Profit, in which he helps struggling entrepreneurs turn their businesses around.

Therefore, when a business leader of Lemonis’ stature announces his withdrawal from a state, the governor should not only take notice but also reach out to learn how to address the situation. Attracting and retaining business investment is a fundamental responsibility of any governor, crucial for generating tax revenue and creating jobs.

But California’s Democrat governor, Gavin Newsom, is not that kind of governor. Rather than focusing on the responsibilities of governing, he appears to be in a perpetual campaign mode, always eyeing a higher office — specifically, the presidency of the United States. As a result, he spends his time chatting with influencers on his podcast, imitating President Trump on social media, and gerrymandering the state’s electoral map.

Unsurprisingly, Newsom’s office took a cheap shot at Lemonis’ criticism on X.com: “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.”

In other words, Newsom appears indifferent to major business chains leaving California, which should concern voters.

A report from the California Policy Center (CPC) identifies California as having the worst business climate in the nation. Since 2020, more than 500 companies, including well-known brands like Airbnb, Alphabet (Google), Chevron, and Elon Musk’s SpaceX, have either left or reduced their operations in the state. The reasons for their departure — such as high taxes, rising wages, and strict regulations related to climate and crime — reflect the growing challenges for California’s economy and job market.

The CPC noted that California “has the highest sales tax rate in the nation 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 in the country, which increases “the cost of virtually all transportation of finished goods and value-added materials used and sold by all businesses,” according to the CPC report.

Other key factors contributing to the high cost of doing business in California are laws that decriminalize property theft, including the 2014 Proposition 47, which reduces penalties for specific drug and property crimes such as drug possession, theft, and shoplifting, and changes any theft up to $950 from a felony to a misdemeanor.

Shoplifting, other theft, and criminal activities have surged in the state. Retailers have since been forced to lock up even basic necessities such as deodorant and toothpaste. Citing the rising cost of dealing with rampant theft, Walgreens closed five stores in San Francisco in 2021, and more than 20 total in a five-year period. 

The business environment in California has significantly deteriorated following Newsom’s decision to raise the minimum wage for fast-food workers from $16 to $20, effective April 1, 2024. This legislation is estimated to lead to approximately 9,600 job losses in the state’s fast-food sector within just the first year.

In June, Lynsi Snyder, the owner of the iconic California fast-food chain In-N-Out Burger, announced that she is relocating to Tennessee, where the company will be establishing a new office. During a podcast discussion, Snyder shared her reasoning, saying, “There’s a lot of great things about California, but raising a family is not easy here. Doing business is not easy here.” Her remarks resonate with the concerns highlighted in Lemonis’ press release.

Newsom and his supporters often tout California’s status as the state with the highest GDP in the nation. However, the CPC highlights that this figure is misleading. A more realistic picture, painted by the CPC, is that as of March 2024, “California has the nation’s highest unemployment, lowest job growth, lowest income growth and the highest poverty rate. Its state budget faces ballooning deficits, and it was just ranked by Chief Executive magazine as the worst state in America to do business for the 10th year in a row.”

Despite these troubling economic conditions and many businesses leaving, it seems unlikely that Gov. Newsom and the Democrat majority in the legislature will change their ineffective policies. For the Californians who cannot leave, the only way to foster improvement is to hold Newsom and his allies accountable at the ballot box. If not, Californians can expect even higher taxes and a declining quality of life. It’s time for the people of California to take action for a better future.