On the Border Mexican Grill & Cantina, a Tex-Mex restaurant chain owned by Argonne Capital Group, has filed for Chapter 11 bankruptcy protection this week. The company operates 80 locations across the United States and internationally but has recently shuttered 40 of them as part of its restructuring strategy. Rising operational costs, particularly with increases in minimum wages, and a decline in customer traffic have contributed to its financial struggles.
The company’s CEO, G.J. Hart, acknowledged that despite making "substantial improvements to the guest experience," financial results for fiscal 2024 fell significantly short of expectations. Hart remains hopeful that these enhancements will eventually bring customers back to their restaurants. However, as bankruptcy attorney Daniel Gielchinsky noted, “Customers never came back in full force,” a sentiment reflecting the broader trend of declining foot traffic in the industry.
To address its debt, On the Border plans to sell three properties in the first quarter of fiscal 2025, with an expected revenue generation of $5.8 million. The company intends to use these funds in part to repay its existing debt, which has become increasingly burdensome in recent years. Filing for bankruptcy is seen as a strategic move to restructure the chain and manage its financial obligations more effectively.
The restaurant chain has also faced challenges in retaining workers, a common issue in the industry exacerbated by rising labor costs. These difficulties have added pressure on On the Border as it seeks to balance operational expenses with customer satisfaction and retention.
Bankruptcy attorney Daniel Gielchinsky projected that more restaurant chains might follow suit in filing for bankruptcy protection in the coming years. The combination of economic pressures and changing consumer behaviors is expected to drive similar decisions across the industry.
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