Taco Bell rival files Chapter 11 bankruptcy; sells company
The fast-casual Tex-Mex restaurant chain filed bankruptcy, sold its assets and closed 11 locations.
Competition in the Tex-Mex and Mexican segments of the restaurant space has been fierce in recent years, led by fast-food chains Yum Brands' Taco Bell (YUM) and Chipotle (CMG) .
Taco Bell is king with about 7,936 locations in the U.S., according to data company ScrapeHero. Chipotle has a good size of the market with 3,398 units. Other major players include Qdoba with over 750 locations and Del Taco (TACO) with over 600.
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Certain Mexican casual restaurant chains have had financial difficulties trying to compete and needed to file for bankruptcy. Chevy's Fresh Mex, which had as many as 37 locations filed bankruptcy a couple of times, most recently in 2018, and currently has 18 locations.
Other Mexican chains have filed bankruptcy and shuttered permanently, including Don Pablo's, which filed bankruptcy in 2017 and closed down in 2019. Another, Chi-Chis, filed bankruptcy and closed permanently in 2004.
Tijuana Flats closes 11 locations
Fast-casual Tex-Mex chain Tijuana Flats Restaurants has ambitious plans in its bankruptcy filing that it hopes will turn the company around to success. The debtor on April 19 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Middle District of Florida, sold the company to a new ownership group and closed 11 of its locations.
The new owners, Flatheads LLC, purchased the restaurant chain from TJF USA LLC with a plan to revitalize its restaurants and reinvigorate the customer experience, the company said in a statement.
“Our company is excited by the new ownership group’s plan to reinvest, focus, and emphasize the things that originally brought so many people to love Tijuana Flats. We understand the immediate financial actions taken by them to ensure the long-term health of this great and iconic brand,” Tijuana Flats CEO Joe Christina said in the statement.
Christina will remain as CEO, the company said.
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The debtor listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition. Its largest unsecured creditors are US Foods, owed $2.9 million and online ordering system provider Mobo Systems, owed $522,689. It also owes $442,249 to the Florida Department of Revenue and $297,572 to the Internal Revenue Service.
Tijuana Flats had not yet filed a motion seeking debtor-in-possession financing on April 19.
Strategic review led to bankruptcy and sale
The company said that the sale and bankruptcy filing are a culmination of a strategic review that it began in November 2023 seeking options to improve its business. The closing of 11 locations was necessary after a unit-by-unit analysis of financial performance, occupancy costs and market conditions. The chain's remaining restaurants will continue to operate as usual.
Flatheads said it plans to go back to basics and original roots, focusing on customer service, quality food and fair prices. The new owners will renew the chain's focus on quality controls, speed of service, consistency of food, serving size, and improving in-store experience.
The company also plans to renovate several of its locations to refresh them and improve the dining experience.
Tijuana Flats, founded in 1995 in Winter Park, Fla., currently operates 65 company owned locations throughout Florida and another 26 franchised restaurants in Alabama, Florida, North Carolina and Tennessee.
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