On the Border Mexican Grill & Cantina Blames Rising Costs for Bankruptcy

Popular chain restaurant On the Border Mexican Grill & Cantina has been struggling to keep the margaritas flowing, resulting in a bankruptcy filing earlier this week. With rising costs and fewer customers coming in for a meal, the Tex-Mex eatery needs to restructure and get some debt relief to stay afloat.

Officially, On the Border is blaming inflation for raising restaurant costs beyond grocery prices, giving consumers a strong reason to stay home and cook instead of eating out. In addition, some states have enacted higher minimum wages for workers, which is digging into On the Border’s bottom line.

Since the closing of 40 restaurants in February, On the Border currently operates about 60 locations in the U.S. Another 20 restaurants in the U.S. and South Korea are run by franchisees. All remaining locations are likely to stay open during the bankruptcy process.

On the Border is owned by Argonne Capital Group, which purchased the chain in 2014. Other restaurants under the private investment firm include Applebee’s and IHOP.

Why Are So Many Restaurants Like On the Border Filing for Bankruptcy?

During the COVID-19 lockdowns, numerous restaurants either failed or barely survived. Once people could go out again, many establishments and industry experts predicted a rush to normalcy, believing eating out would return to levels seen in 2019. However, that did not pan out as expected.

Once the pandemic was over, consumers were faced with high inflation. Paying for essentials, like groceries, took priority, and dining out became a luxury many could not afford. As a result, casual restaurants like On the Border suffered with low foot traffic.

On the Border’s bankruptcy follows a similar path taken by other chains. Once the king of seafood, Red Lobster closed numerous restaurants last year, followed up shortly by a bankruptcy filing. TGI Friday’s also entered bankruptcy in 2024 but committed to keep its locations up and running.

Last month, it was rumored that Hooters was preparing to file bankruptcy after closing several restaurants. Unnamed sources reportedly said the chicken wing chain had engaged a law firm to begin Chapter 11 paperwork.