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Popular Tex-Mex Chain Declares Bankruptcy & Shutters 40 Restaurants

The struggling chain is being sold to a new owner as it works to get back on track.
FACT CHECKED BY Justine Goodman

Less than a week after the Midwestern ice cream shop chain and dairy company Oberweis announced it was filing for bankruptcy protection, the restaurant industry is being shaken up yet again by another major bankruptcy.

Tijuana Flats, a Florida-based chain of fast-casual Tex-Mex restaurants, just announced that it has declared Chapter 11 bankruptcy and is being sold to a new ownership group called Flatheads, LLC. In a press release, Tijuana Flats said it shuttered 11 restaurants during the week of April 14 in conjunction with the bankruptcy filing. A company representative told Eat This, Not That! that one of the impacted locations was in Virginia, while the other 10 were in Florida.

These closures were the "result of a unit-by-unit analysis of financial performance, occupancy costs, and market conditions," according to the release.

"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," CEO Joe Christina said in a statement.

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Tijuana Flats exterior
Kandi G. / Yelp

The chain has closed a total of 40 locations since the start of the year, Restaurant Business Magazine reported, citing court documents. It now operates 65 company-owned locations in Florida, while franchisees run an additional 26 restaurants across Florida, Alabama, North Carolina, and Tennessee. All of the remaining locations will continue to operate normally.

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The release said that the sale and bankruptcy filing "are the culmination of a strategic review that started in November of 2023 when the company began exploring various options which had included a potential sale."

The company has blamed rising food and labor costs and changes in consumer spending following the COVID-19 pandemic for some of its financial woes. Additionally, court documents revealed that Tijuana Flats struggled from a drop in sales and customer satisfaction after expanding its menu in 2021. The new menu additions required more equipment and staff and took longer to prepare, which resulted in slower service times and higher costs, per Restaurant Business Magazine.

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According to the publication, Tijuana Flats currently has nearly $19 million in secured debt.

This may not be the only major restaurant chain bankruptcy consumers see in 2024. Bloomberg, citing unidentified sources familiar with the matter, reported last week that Red Lobster is considering filing for Chapter 11 bankruptcy after struggling with high food and labor costs and significant operating losses. While a final decision on bankruptcy reportedly has yet to be made, the people said the seafood chain believes a Chapter 11 filing could help it renegotiate leases and drop some long-term contracts while it continues operations.

Zoe Strozewski
Zoe Strozewski is a News Writer for Eat This, Not That! A Chicago native who now lives in New Jersey, she graduated from Kean University in 2020 with a bachelor’s degree in journalism. Read more about Zoe