One challenge of habitat restoration is establishing healthy native plants that survive, grow, and reproduce. The addition of mulch after initial planting is thought to enhance native plant establishment. In our efforts to restore degraded sites at Crystal Cove State Park in Southern California, we compared two experimental mulch treatments made from native and non‐native plant material to unmulched plots. We planted four different native shrub species: Eriogonum fasciculatum, Malosma laurina, Isocoma menziesii, and Diplacus aurantiacus, and measured plant size, soil moisture, and plant density in the first year. In the second year, the same measurements were taken for I. menziesii and D. aurantiacus, which had greater survivorship in the first year. Our results showed significant differences in plant height, length, and width among the species but not between mulch treatments. However, soil moisture significantly varied between treatments, with native mulch plots having the greatest volumetric water content. In addition, mulch treatments had a significant effect on naturally recruiting plant density, with both mulch treatments having fewer native and non‐native seedling densities compared to control plots. Regarding survivorship, significant differences between species and treatment were observed only in the first year. Our results confirmed that mulch effectively helped retain higher soil moisture. Both locally sourced native and non‐native mulch had this benefit, although native mulch resulted in greater increases in soil moisture. While mulch reduced non‐native plant establishment, it also limited native recruitment, leading us to recommend that mulch be used only during the initial establishment of container plants.