The phrase “Mexican chain closes 77 locations” reflects a significant moment in the restaurant industry. This dramatic move by On The Border Mexican Grill & Cantina, prompted by a Chapter 11 bankruptcy filing, illustrates the mounting pressure on casual dining chains in today’s volatile economic climate. In this comprehensive guide, we’ll explore everything you need to know about Mexican Chain Closes 77 Locations. You’ll find structured insights, a key data table, and an FAQ to fully grasp the situation.
Mexican Chain Closes 77 Locations Background
In early March 2025, OTB Holding LLC, owner of On The Border Mexican Grill & Cantina, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in the Northern District of Georgia. As part of its restructuring strategy, the company closed 77 locations across 24 states due to underperformance and financial strain.
At the time of filing, On The Border operated approximately 80 restaurants—mostly in the U.S., with some in South Korea. The chain cited heavy lease burdens—$25.3 million spent in 2024, with $11.9 million tied to underperforming locations—as a leading factor in its financial woes.
Why “Mexican Chain Closes 77 Locations” Matters
This headline symbolizes much more than temporary business trouble—it underscores challenges in:
Rising lease and fixed costs: Underperforming leases drained liquidity.
Macroeconomic factors: Inflation, labor cost increases, and shifting consumer habits hit profitability.
Competition & consumer behavior: Casual dining chains have struggled to compete with fast-casual alternatives while navigating evolving dining preferences.
Operational Challenges & Financial Strain
Liquidity Crisis and Lease Obligations
The 2024 financials highlighted a severe liquidity squeeze—$25.3 million in lease obligations, $11.9 million of which came from underperforming locations. In response, On The Border rapidly moved to close and vacate 40 non-performing sites by late February 2025.
Judicial filings reflect a strategy to reject burdensome leases through the bankruptcy process.
Macroeconomic Pressures
The chain’s restructuring was attributed to inflation, labor shortages, and customers shifting towards at-home dining. As Jonathan Tibus, Chief Restructuring Officer, put it: “On The Border has been weighed down … macroeconomic factors … Casual dining restaurants are acutely impacted by consumer sensitivities to eating out versus staying in.”
Impacts on Employees, Vendors & Community
This mass closure deeply affected:
Employees: The chain employed around 2,800 people, including 375 full-time hourly, 216 full-time salaried, and 2,210 part-time hourly workers.
Vendors and landlords: The inability to meet obligations triggered service cut-offs, repossessions, and lease enforcement
Local communities: Shuttered locations reduced dining options, especially in mid-market and suburban areas.
Restructuring & Future Prospects
Despite the closures, the chain aims to use Chapter 11 to restructure, improve operations, and position itself for a sale.
Sale process: Pappas Restaurants emerged as the likely buyer and prevailing bidder, offering potential revival under familiar Tex-Mex leadership.
Continued operations: Remaining restaurants continue operating during restructuring, as the company seeks to stabilize and refocus.
Table: Key Challenges Faced by On The Border
| Challenge | Description |
|---|---|
| Lease obligations | $25.3M in 2024, with $11.9M tied to losing locations |
| Liquidity crisis | Rapid loss of cash led to vendor/landlord actions |
| Macroeconomic pressures | Inflation, labor costs, rising menu prices reduced traffic |
| Consumer behavior shift | Preference toward dining at home or faster, more niche experiences |
| Heavy competition | Fast-casual, delivery, and ghost kitchens took market share |
| Responsibility to workforce | Maintaining pay amid closures via “first-day” bankruptcy pleadings |
Customer & Industry Reactions
Fans were dismayed and vocal on social media—one wrote: “No, how could it happen? The only suitable Tex-Mex up North.” Another lamented: “Always enjoyed On The Border… That location never got back up to speed after COVID.”
Industry peers and analysts view the closures as symptomatic of broader distress in casual dining, citing similar bankruptcies among chains like Red Lobster, TGI Fridays, and others.
In this comprehensive guide, we’ve explored everything you need to know about Mexican chain closes 77 locations.
The Road Ahead: Potential Outcomes
1.Streamlined operations: Focus on fewer, profitable locations.
2.New ownership infusion: Pappas Restaurants may drive revitalization.
3.Renegotiated leases and cost control: Reduce expenses and reclaim viability.
4.Menu and experience innovation: Adapt to current consumer preferences.
5.Possible reopening: Strategic locations could return post-stabilization.
(FAQ) About Mexican Chain Closes 77 Locations
Q1: Why did the Mexican chain closes 77 locations?
A: Driven by severe financial strain—high lease costs, liquidity loss, inflation, and a decline in dine-in demand. The Chapter 11 process enabled lease rejections and operational downsizing.
Q2: Which chain is this?
A: On The Border Mexican Grill & Cantina.
Q3: How many employees were affected?
A: Approximately 2,800 employees, including both full- and part-time workers.
Q4: What triggered the bankruptcy filing?
A: A rapid loss of liquidity and inability to service lease and vendor payments created a critical financial crisis.
Q5: What’s next for On The Border?
A: The chain is pursuing restructuring and possible sale, with Pappas Restaurants as a key bidder. Remaining restaurants continue to operate during the process.
Q6: Could some locations reopen?
A: While no firm plans exist now, strategic reopening is possible once the company stabilizes or new ownership takes shape.
Conclusion: Mexican Chain Closes 77 Locations
The phrase “Mexican chain closes 77 locations” captures a pivotal restructuring event in the casual dining sector. For On The Border, it signified a critical step toward survival via Chapter 11 proceedings. With substantial lease burdens, economic pressures, and evolving customer behavior, the brand faced mounting losses that required radical change.
As the Chapter 11 process unfolds—supported by potential acquisition by Pappas Restaurants—the chain seeks a rebirth. If it succeeds in sharpening operational efficiency, revitalizing its brand, and adapting to modern dining trends, it might emerge stronger and more focused. In this comprehensive guide, we’ve explored everything you need to know about Mexican chain closes 77 locations.
