Longtime Tex-Mex Restaurant Chain Declares Bankruptcy
(KNUE-FM) A much-loved Tex-Mex restaurant chain has declared bankruptcy.
Abuelo's Mexican Restaurant and Food Concepts International (FCI), its parent company, filed for Chapter 11 bankruptcy on September 2.
FCI asked the courts to combine the two bankruptcy cases so the process would be less convoluted.
Why did they make this decision?
Why Did Abuelo’s File for Bankruptcy?
According to an article from Chron.com, the company had accumulated debts between $10 and $50 million.
It's sad to see another restaurant close its doors. I have enjoyed dining at Abuelo's since my college days in Abilene, and have enjoyed the Tyler location since moving back to East Texas.
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I enjoyed the food, but just as much enjoyed the restaurant itself. The plantlife and indoor courtyard vibe were quite appealing to me. I hope they find a way to restructure so this isn't the end of an era.
A Tex-Mex Chain with Texas Roots
And what an era it's been so far.
The restaurant was founded in Amarillo back in 1989 and reached 40 locations in its heyday. By the time 2023 arrived, it had declined to 26 locations across the country.
What other factors played a role?
Key Factors Behind Abuelo’s Struggles
If you were to review the filing submitted to the courts, you'd read that various issues contributed to the decline. Some of these factors include post-pandemic inflation, labor shortages, and reduced consumer spending.
In fact, business across Abuelo's locations dropped almost 6 percent year-over-year in 2023.
How Extreme Heat Hurt Business
But it was also just too hot. Literally.
Last summer, there were some extremely hot days, resulting in 63 closure days in restaurants affected by the heat. That translated to more than $500,000 in lost revenue for the Tex-Mex chain.
What This Could Mean for Abuelo’s Future
Granted, Abuelo's did enjoy a 7.7 percent increase in "off-premises sales." Despite that, it wasn't enough to compensate for the overall financial hit.
That's especially true when considering that business didn't include tipping on certain beverage purchases that customers inside the restaurants would make. Both of those are significant revenue streams.
The company closed underperforming locations in an effort to stabilize after the hit, but it just wasn't enough.
Abuelo's is now another one on the list of casual dining chains hoping for relief by declaring bankruptcy in 2025, which includes On the Border.
Here's hoping they'll have the opportunity to reorganize, stabilize, and start a new, different type of chapter.