Bankrupt dining chain closes over half its locations in 6 months

The casual dining sector has dealt with financial distress over the last year, with restaurant chains closing dozens of locations in 2024 and continuing to close more in 2025.

Several of these chains have also been forced to file for bankruptcy and sell many of their restaurants to remain a going concern.

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Popular seafood chain Red Lobster filed for bankruptcy in May 2024 and emerged from Chapter 11 in September 2024. The restaurant operator has closed about 187 restaurants since filing for bankruptcy and now operates about 478 locations in 44 states as of April 24, according to the store locator on its website.

Related: Huge burger chain franchisee files for Chapter 11 bankruptcy

Mexican chain Rubio’s Coastal Grill on June 5, 2024, filed for Chapter 11 bankruptcy to restructure its debts and closed 51 of its 134 restaurants in Arizona, California, and Nevada. The casual dining chain, which had as many as 150 locations at one time, currently has 83 restaurants, according to its website.

Tex-Mex chain Tijuana Flats Restaurants, which had as many as 123 locations, on April 19, 2024, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Middle District of Florida, sold the company to a new ownership group, and closed 11 of its locations.

The company currently operates 65 company-owned locations throughout Florida and another 26 franchised restaurants in Alabama, Florida, North Carolina, and Tennessee, at last check.

Restaurant distress has led to closed locations and bankruptcy filings in 2025, as well.

On The Border closed 40 non-performing locations

Another struggling Mexican restaurant chain, On The Border Mexican Grill & Cantina, on March 4, 2025, filed for Chapter 11 bankruptcy with plans to sell its assets to its prepetition bridge loan lender, which is an affiliate of Pappas Restaurants.

The debtor blamed a long list of problems that forced it to file for bankruptcy, including issues with liquidity, a negative macroeconomic environment, labor shortages, underperforming restaurants, creditor enforcement actions, inflation that led to higher menu prices, and changing consumer discretionary spending habits.

On The Border consists of about 80 locations, with 60 operated by OTB Holding, which is 100% owned by private equity firm Argonne Capital Group’s affiliate Borders Holdings, and 20 others run by franchisees.

The debtor closed or vacated 40 non-performing stores on Feb. 24 because of problems with rent and/or financial performance.

TGI Friday’s has closed over half its locations 

Another bankrupt casual restaurant chain, TGI Friday’s Inc., has closed over half of its U.S. locations over the last six months, dating back to just before it filed for Chapter 11 protection.

Related: Popular breakfast chain franchise files for Chapter 11 bankruptcy

The restaurant company on Oct. 21, 2024, listed 213 locations in 29 states on its website locator, but by Oct. 29, it had adjusted the list to 163 U.S. locations on the locator site. The company had about 550 franchise locations in 55 countries at the time.

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TGI Fridays had 39 corporate-owned restaurants and 122 franchised locations, totaling 161 in the U.S., when it filed for Chapter 11 protection on Nov. 2, 2024. The U.S. franchised restaurants and 316 international franchises did not file for bankruptcy.

The dining chain divested of its corporate-owned locations in January 2025, as it sold 27 of its remaining restaurants and closed the other 12 locations that lacked interest from potential buyers.

The restaurant chain’s U.S. footprint has been reduced by over half of its 213 locations in six months, as the company’s website locator listed 85 U.S. locations on April 24.

Today, the chain has 461 restaurants in 44 countries.

Related: Popular pizza chain franchisee files for Chapter 11 bankruptcy

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