On the Border Mexican Grill & Cantina filed for bankruptcy protection this week as it struggled to compete in the macroeconomic environment.
The Tex-Mex chain, owned by Argonne Capital Group, filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Northern District of Georgia earlier this week after reportedly shuttering 40 locations.
According to its bankruptcy filing, the company operates 80 locations in the U.S. and internationally.
Like its rivals, the company said it has seen a decline in traffic in recent years, struggled to retain workers and faced growing costs as minimum wages rose, according to The Associated Press.
FOX Business reached out to Argonne Capital Group for comment.
It’s the latest in a growing number of major restaurant chains that have filed for protection in bankruptcy court after struggling to manage the heavy debt it accumulated during the COVID-19 pandemic.
It won’t be the last either, according to bankruptcy attorney Daniel Gielchinsky, who projected there will likely be more restaurants filing for protection over the coming years.
TGI Friday’s, Denny’s, Ruby Tuesday, Rubio’s Coastal Grill and Red Lobster have filed for protection in bankruptcy court in recent years, with Hooters of America potentially joining the list.
The company is considering filing for bankruptcy as a means of restructuring the restaurant chain and tackling its debt, sources recently told Bloomberg.
The industry expected consumer spending at restaurants to return to pre-pandemic levels once things returned to normal.
But the quick-service sector started facing slowing traffic in back-to-back quarters as inflation-wary consumers continued to eat at home more often.
“Customers never came back in full force” due to changes in their habits and spending ability, which meant top-line revenue never rebounded and debt-ridden restaurants were unable to repay those loans, according to bankruptcy attorney Daniel Gielchinsky.
Some companies that didn’t file for bankruptcy significantly reduced their footprint to position themselves better in the current environment, and drive traffic customers back to their restaurants.
Red Robin announced as recently as this week that it is also considering closing 70 locations once their lease expires, as it attempts to turn around its operations.
The company plans to sell three properties during the first quarter of fiscal 2025.
The sale of those locations is expected to generate $5.8 million, which the company anticipates will be used in part to repay its debt.
While financial results for fiscal 2024 “fell well below” the company’s original expectations, CEO G.J. Hart said the company has made “substantial improvements to the guest experience” to try and drive traffic back to its restaurants.
Fast-food chain Wendy’s shuttered 140 underperforming locations through the end of 2024 as it looks to improve its “restaurant footprint and overall system health.”
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