Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Major Mexican Restaurant Chain, Rita Restaurant Corp, files Chapter 11
Author: Joel R. Glucksman
Date: November 15, 2016
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Recently, Rita Restaurant Corp, the owner of Don Pablo’s Mexican Kitchen, one of the largest Mexican food chains in the country, announced it filed for Chapter 11 bankruptcy protection. According to The Wall Street Journal, while the restructuring plan is not set yet, the company could close a substantial portion of its 16 chain locations in 10 states.
Rita Restaurant Corp falls into insolvency
In its bankruptcy documents, Rita Restaurant Corp cited a general market down shift away from fast food Mexican food brands due to over-saturation. The Journal reported that there has been a significant increase in fast casual food dining restaurants and competition in the Mexican food space in recent years, which has made it tougher to sustain sales revenues.
With similar chain brands such as Moe’s Southwest Grill, Panchero’s Mexican Grill, Baja Fresh, Qdoba, Chipotle Mexican Grill, Chili’s, Applebee’s and TGI Friday’s opening more and more locations across the country with Mexican food offerings, Don Pablo’s financial performance has struggled.
As a result of this downward pressure in the Mexican food restaurant market, Rita Restaurant Corp reported both assets and debt liabilities ranging from $1 million to $10 million, according to Cincinnati.com.
This downward trend has impacted several other national fast casual food chain restaurants this year. Within the last year, Garden Fresh Restaurant Corp., Cosi Inc., Logan’s Roadhouse and Fox & Hound restaurants have all filed for Chapter 11 bankruptcy protection due to steadily dropping sales revenues.
Rita Restaurant Corp’s reorganization plan
Rita Restaurant Corp has not reached refinancing agreements with its creditors as of yet, but the company has already begun to close stores in certain states. There is no plan to shutter more locations as the company enters the bankruptcy process, but speculation is that it will.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
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