Bad news for On the Border Mexican Grill & Cantina customers. The restaurant chain has announced it will close more than 70 locations after filing for Chapter 11 of the U.S. Bankruptcy Code. But will this be the end of the company? Here’s what we know.
Why did On the Border file for bankruptcy?
The company filed for Chapter 11 bankruptcy earlier this month after reporting financial struggles primarily due to rising operational costs, the impact of inflation, labor shortages, and poor restaurant performance caused by a lack of customers.
According to Jonathan Tibus, the restructuring director of OTB Holdings, On the Border has been affected in recent years by macroeconomic factors that have negatively impacted the company. Casual dining restaurants are severely impacted by consumer sensitivity to dining out versus staying at home.
This led the company to accumulate significant debts with landlords and suppliers, which became difficult to repay. As a result, suppliers stopped providing products, and leased locations were seized.
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How many locations has On the Border closed?
Before filing for bankruptcy, On the Border had approximately 80 restaurants in operation, 60 of which were company-owned and 20 were franchised. However, in February of this year, the company closed a third of its restaurants considered unprofitable.
Some of the On the Border locations mentioned in court documents have been closed by the company, including a branch located in Phoenix, Arizona.
History of On the Border
On the Border’s journey began in 1982 when the first location opened with the aim of offering a culinary experience inspired by the border. During its first 12 years, the company experienced significant growth and was acquired by Brinker International, which started opening franchises.
By 2001, On the Border had more than 100 restaurants in the United States. In 2007, the brand expanded internationally by opening locations in South Korea. Later, in 2010, the chain was sold along with its 160 restaurants to Golden Gate Capital, which, in turn, sold it to Argonne Capital Group in 2014.
What is Border Rewards?
It’s the company’s loyalty program. By joining, you’ll earn 1 point for every $1 you spend (excluding delivery) and 1 additional point for every $10 spent on catering services. The more points you accumulate, the greater the rewards you can enjoy on your future visits.
Throughout the year, you’ll receive extra rewards and point promotions that will help you reach your rewards even faster. As a welcome gift, your first reward will be a free item of your choice, which will be added to your account within 24 to 48 hours.
How do I redeem rewards at On the Border?
To redeem a reward at the restaurant, simply let your server know to add your account to the order and inform them you have a reward available. Once linked, the server can apply your available rewards. If you place an order online, make sure to log in to your account and apply your available rewards at checkout.
Rewards earned at the restaurant can be used both in the restaurant and for catering services, while rewards earned through catering can be used either in the restaurant or for catering (only on eligible items).
What is Chapter 11 of the U.S. Bankruptcy Code?
Chapter 11 allows companies to reorganize their debts, typically with the goal of continuing operations. It is one of the most complex bankruptcy procedures, in which the company must present a detailed reorganization plan and negotiate with creditors.
This legislation provides businesses with a chance for a fresh start, although it may also result in the partial transfer of asset ownership to creditors. As a result, business owners must carefully assess the costs and benefits before deciding to file for bankruptcy.
