On the Border Files for Bankruptcy Amid Struggles in Restaurant Industry

ATLANTA, Ga. — On the Border Mexican Grill & Cantina has filed for Chapter 11 bankruptcy protection, joining a growing list of restaurant chains struggling to navigate a challenging economic landscape. The announcement was made Tuesday in federal bankruptcy court in the Northern District of Georgia, following the closure of 40 locations last year.

Owned by Argonne Capital Group, On the Border operates 60 restaurants in 18 states, which will continue to remain open during the bankruptcy proceedings. The chain also has 20 franchise-operated restaurants in South Korea and the U.S., according to company reports.

In its court filing, On the Border cited declining customer traffic and increased operational costs as major challenges. The restaurant noted that inflation and rising minimum wage laws have significantly impacted its profitability. “Customers never came back in full force,” explained bankruptcy attorney Daniel Gielchinsky, adding that shifting consumer habits and spending abilities have left many debt-ridden establishments unable to recover.

On the Border is not alone in its struggles. Other chains, such as TGI Fridays, Denny's, and Red Lobster, have also filed for bankruptcy protection in recent years. Sources have indicated that Hooters of America may be considering a similar move as it grapples with rising debt accumulated during the COVID-19 pandemic.

Gielchinsky anticipates that additional restaurant bankruptcies will occur in the coming years, as many companies struggle to regain pre-pandemic levels of consumer spending. He pointed out that restaurants are dealing with inflationary pressures while families are opting to cook at home more often.

Some restaurants that have avoided bankruptcy are reevaluating their operations. For instance, Red Robin recently announced plans to close 70 locations to improve its operational efficiency. G.J. Hart, Red Robin’s CEO, acknowledged that financial results for the last fiscal year were “well below” expectations, emphasizing that the company is implementing substantial improvements to enhance guest experiences.

On the Border was founded in Dallas in 1982 and was acquired in 1994 by Brinker International, the parent company of Chili's. It expanded rapidly after transitioning to franchising and grew its presence both nationally and internationally before being sold to Argonne Capital Group in 2014. The company’s assets are estimated to be between $10 million and $50 million, as reported in court documents.

The overall restaurant industry initially projected a return to pre-pandemic consumer spending levels but has faced setbacks as inflation continues to rise. Many restaurants reported a struggle to maintain foot traffic in the face of escalating costs and shifting consumer preferences.