Rubio’s Files for Chapter 11 Bankruptcy Protection amid Economic Challenges
Rubio’s Coastal Grill, a popular fast-casual chain known for its fresh Mexican cuisine, has made headlines once again, but this time for filing for Chapter 11 bankruptcy protection. The company, which recently closed nearly 50 locations in California, is seeking this action to facilitate the sale of its business.
The decision to file for bankruptcy comes as Rubio’s faces challenging economic conditions, including diminishing in-store traffic due to sustained work-from-home trends, rising food and utility costs, and significant increases to the minimum wage in California. With the minimum wage in California now at $20 an hour, the company has struggled to meet its debt burden.
Nicholas Rubin, the chief restructuring officer for Rubio’s, expressed optimism about the company’s future despite the bankruptcy filing. He stated, “Rubio’s Coastal Grill is one of the legendary fast casual chains with a strong and loyal customer following in its communities. The company believes the best path forward for Rubio’s is through a court-supervised sale process that will position the brand for long-term success to grow and flourish.”
Rubio’s has secured debtor-in-possession financing from its existing lender and plans to enter into a stalking horse purchase agreement to sell its assets to an interested buyer chosen by the lender. The company anticipates completing the sale transaction within the next 75 days.
Despite the bankruptcy filing, Rubio’s is committed to honoring all gift cards and rewards at its remaining 86 locations in California, Arizona, and Nevada. The company is also seeking court approval to continue operations during the sale process to ensure the continued payment of employee wages and benefits.
Founded in 1983 in San Diego by Ralph Rubio, Rubio’s has undergone several changes over the years, including a name change from Rubio’s Fresh Mexican Grill to Rubio’s Coastal Grill in 2015. The company was acquired by private-equity firm Mill Road Capital in 2010 for $91 million.
Rubio’s is the latest in a series of restaurant concepts to seek bankruptcy protection as the industry continues to recover from the pandemic. Other notable bankruptcies in the industry include Red Lobster, Party Fowl, Boxer Ramen, Tijuana Flats, and more.
As Rubio’s navigates this challenging time, the company remains hopeful that the sale process will position it for long-term success and growth in the future.
