Mexican Restaurant Chain Faces Financial Turmoil Amid Industry Struggles

Irving-based Tex-Mex chain On the Border has filed for Chapter 11 bankruptcy protection, closing 40 locations nationwide as it battles over $25 million in debt amid changing consumer dining habits and rising operational costs.

Quick Takes

On the Border Mexican Grill & Cantina filed for Chapter 11 bankruptcy in Georgia Northern Bankruptcy Court, with over $25 million in debt and more than 10,000 creditors.
The chain has already closed 40 of its 120 locations, reducing its footprint to 60 company-owned and 20 franchised restaurants across the U.S. and internationally.
Jonathan Tibus, a restructuring expert, has been appointed as chief restructuring officer to navigate the bankruptcy process.
The filing reflects broader industry trends, as chains like TGI Friday’s, Denny’s, Ruby Tuesday, and Red Lobster also face financial struggles in the post-pandemic economy.
Consumer spending at restaurants remains below pre-pandemic levels as inflation drives more people to eat at home.

Financial Troubles Mount for Popular Tex-Mex Chain

On the Border Mexican Grill & Cantina, the Irving, Texas-based restaurant chain known for its sizzling fajitas and border-style Mexican cuisine, has filed for Chapter 11 bankruptcy protection in the Georgia Northern Bankruptcy Court. The Tex-Mex chain, owned by Argonne Capital Group, is struggling with more than $25 million in debt and faces over 10,000 creditors. The bankruptcy filing includes six affiliated entities operating in Kansas, Maryland, and New Jersey, signaling widespread financial distress throughout the company’s operations.

The restaurant chain has already closed 40 underperforming locations, reducing its total store count from 120 to just 80 units – 60 company-owned and 20 franchised. As part of the bankruptcy proceedings, the company is seeking court approval to terminate leases for non-operational locations, a move that could help reduce ongoing expenses. This dramatic reduction in footprint comes after the chain experienced nearly a 3% decline in same-store sales, while competitors in the same category reported significant sales and unit growth during the same period.

🚨#BANKRUPTCY🚨 On the Border Mexican Grill & Cantina is the latest in a growing number of chain restaurants to file for bankruptcy. https://t.co/p8V2o7dcKi

— KWTX News 10 (@kwtx) March 7, 2025

Leadership Changes and Restructuring Efforts

In an effort to navigate through the bankruptcy process, On the Border has appointed Jonathan Tibus, a seasoned restructuring expert, as its chief restructuring officer. Tibus faces the challenging task of stabilizing the company’s finances amid a difficult macroeconomic environment marked by labor shortages, rising operational costs, and changing consumer behaviors. The company’s financial struggles have been building for some time, including a failed digital makeover that did not produce the expected results in driving traffic and sales.

The chain’s primary issues stem from declining foot traffic and worker retention problems, which have been exacerbated by rising costs across the board, including minimum wage increases in many states. These problems have created a perfect storm for the restaurant, forcing it to take this drastic step in restructuring. This bankruptcy marks one of the first significant foodservice bankruptcies of 2025, though industry experts suggest it likely won’t be the last, with rumors that Hooters may also be preparing for bankruptcy filings later in the year.

Part of a Larger Industry Trend

On the Border’s bankruptcy filing is not an isolated incident but part of a concerning trend among restaurant chains still struggling with debt accumulated during the COVID-19 pandemic. Several other well-known casual dining establishments have faced similar financial difficulties, including TGI Friday’s, Denny’s, Ruby Tuesday, Rubio’s Coastal Grill, and Red Lobster. This industry-wide challenge reflects the lasting impact of the pandemic on consumer dining habits and restaurant operations.

Consumer spending at restaurants has not returned to pre-pandemic levels, with inflation causing more people to eat at home rather than dining out. This shift in consumer behavior has forced many restaurant chains to reevaluate their business models and reduce their number of locations to improve financial stability. Red Robin, for instance, has announced plans to close 70 locations and sell properties to repay debt, while Wendy’s closed 140 underperforming locations to enhance its restaurant footprint and overall system health.

The casual dining sector has been hit particularly hard, as consumers have become more selective about their dining experiences and increasingly sensitive to price increases. While On the Border works through its Chapter 11 process, the company hopes to emerge with a more streamlined operation that can better compete in today’s challenging restaurant landscape. Whether this restructuring will be enough to save the brand remains to be seen in an industry still searching for solid footing post-pandemic.