On the Border Files for Bankruptcy Amid Rising Costs and Shifting Consumer Behavior
Tex-Mex chain On the Border has filed for Chapter 11 bankruptcy, citing inflation and declining customer visits as core issues.
Overview
On the Border Mexican Grill & Cantina has filed for Chapter 11 bankruptcy, struggling under the weight of pandemic-related debt, rising operational costs, and reduced consumer traffic. The chain, which operates 80 restaurants in the U.S. and internationally, has closed 40 locations and attributes its challenges to inflation and changing dining habits. It joins a list of other casual dining chains, including Red Lobster and TGI Fridays, facing similar issues. With plans to sell its assets, the company hopes to restructure amidst a tough restaurant market.
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Analysis
- On the Border filed for bankruptcy protection due to inflation, changing dining habits, and rising labor costs, joining several other casual dining chains facing similar challenges.
- The restaurant industry has been heavily impacted by a decline in customer traffic and increased competition, leading to multiple chains like Red Lobster and TGI Friday’s seeking bankruptcy protection.
- Companies are attempting to adapt by reducing locations and enhancing customer experience to drive traffic back, though some are still struggling to recover post-pandemic.
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Associated Press·4M·FAQ
On the Border filed for Chapter 11 bankruptcy due to a combination of factors including a difficult macroeconomic environment, labor shortages, underperforming restaurants, creditor enforcement actions, inflation leading to higher menu prices, and changing consumer discretionary spending habits.
On the Border operates about 80 locations, with 60 company-operated and 20 franchisee-operated. The company recently closed 40 underperforming locations.
On the Border plans to sell its assets to a stalking-horse bidder, an affiliate of Pappas Restaurants, and is seeking additional financing to maintain operations during the restructuring process.
On the Border's bankruptcy reflects broader challenges in the restaurant industry, including declining customer traffic, rising operational costs, and debt issues exacerbated by the COVID-19 pandemic, similar to other chains like Red Lobster and TGI Fridays.
History
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