On the Border files for Ch. 7 liquidation
On the Border files for Chapter 7 while facing challenges in casual dining and a shrinking unit count.
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On the Border Mexican Grill, operated by OTB Hospitality, has filed for Chapter 7 bankruptcy liquidation following prior closures and difficulties resulting in just five franchised locations remaining open. This bankruptcy marks the second filing for the brand in a year and a half, which reflects broader struggles within the casual dining industry amid inflation and evolving consumer preferences.
Why It Matters
This filing may compress available territories for On the Border franchisees as the brand reassesses its footprint, potentially impacting the unit economics for remaining locations.
On the Border (OTB), operated by OTB Hospitality, has filed for Chapter 7 bankruptcy liquidation, marking a significant downturn for the casual dining chain that has now dwindled to five operational franchised locations. The court records from the U.S. Bankruptcy Court for the Southern District of Texas indicate that the company has between $500,000 and $1 million in assets but carries liabilities ranging from $1 million to $10 million. This filing is the second bankruptcy for On the Border within a year and a half, following a Chapter 11 filing in March 2025 which resulted in its acquisition by Pappas Restaurants.
The troubles faced by On the Border have been attributed to a combination of rising menu prices affecting consumer behavior, increased labor costs, and burdensome lease obligations. Notably, the brand spent over $11.8 million on leases for underperforming locations in 2024 alone, leading to the closure of around 40 sites prior to its initial bankruptcy filing. Despite Pappas Restaurants' endeavors to revamp operations and modernize the brand, the chain’s performance has continued to decline, evidenced by further store closures prior to the recent Chapter 7 liquidation.
