Image Courtesy of Tijuana Flats
Tijuana Flats Filed for Chapter 11. So Why Are They Opening More Stores?
September 25, 2024
Tijuana Flats, once one of the most popular Tex-Mex restaurants in the country, filed for Chapter 11 bankruptcy back in April. However, the fast-food chain is still opening new stores amid the proceedings. So, what’s going on?
Tijuana Flats Expansion
According to the Orlando Business Journal, the Orlando-based Tex-Mex restaurant chain is preparing to debut in a new state, with two franchise locations being planned. Furthermore, a new corporately owned eatery is opening soon.
Kentucky is the state welcoming Tijuana Flats, with the two franchise restaurants currently under construction. CEO James Greco did not inform the outlet of their precise locations. Nevertheless, he verified that the two units will be run by franchisees with portfolios of various concepts.
According to Greco, the corporation is considering locations like Greenville or Spartanburg, South Carolina, and Brunswick or Savannah, Georgia, as options for the new corporate-owned restaurant. He referred to these cities as infill markets, or areas of potential where Tijuana Flats hasn’t been present.
Plans for the restaurant chain’s expansion may appear illogical amid bankruptcy proceedings. However, according to Scott Shuker of Shuker & Dorris P.A., an Orlando-based company bankruptcy lawyer, only the corporate sites of Tijuana Flats and its franchise rights are in bankruptcy, not the franchises. He noted that the issue does not involve the operations of franchised eateries.
“It is fairly uncommon to open new locations but, in this case, where the lender is essentially taking over and they are focused on more profitable locations, it’s not necessarily surprising,” Shuker said to the outlet.
Tijuana Flats was founded in Winter Park, Florida, in 1995. In April 2024, the restaurant chain was purchased by a new ownership group, filed for Chapter 11 bankruptcy protection, and closed 11 locations, according to the Orlando Sentinel.
Chapter 11 Is Not a Company Death Sentence
Tijuana Flats’ Chapter 11 bankruptcy filing isn’t a company death sentence, as Red Lobster’s recent resurrection has proven.
Last week, the once-troubled casual seafood restaurant declared its official exit from Chapter 11 bankruptcy. According to a press release, the restaurant’s new 35-year-old CEO, Damola Adamolekun, has formally assumed his role and pledged to breathe new life into the once-struggling business.
“Red Lobster is now a stronger, more resilient company, and today is the start of a new chapter in our history,” he said in a statement accompanying the press release. “From the opening of our first restaurant in 1968, Red Lobster has focused on serving diners high-quality seafood at affordable prices. I’ve been a Red Lobster fan since my first dining experience as a 9-year-old at our Springfield, Ill, restaurant — and as I’ve prepared to step into the role of CEO, I’ve met hundreds of diners across the country who, just like me, are as passionate about Red Lobster now as they were on their first visit.”
His statement continued: “As part of our new ownership structure, we have backers who have a history of making successful investments in restaurants. Our comprehensive and long-term investment plan for Red Lobster includes a commitment of more than $60 million in new funding which will help us to deliver improvements across every aspect of our company. I’m looking forward to working with our 30,000-strong team to bring our plan to life.”
As a result of RL Investor Holdings LLC’s official acquisition of the Red Lobster restaurant chain, the company has officially emerged from Chapter 11 bankruptcy restructuring. Together with co-investors Blue Torch and TCW Private Credit, funds administered by affiliates of Fortress Investment Group LLC (“Fortress”) formed RL Investor Holdings LLC.
Red Lobster is currently a stand-alone, privately held company that runs 545 restaurants in 44 states in the United States and four provinces in Canada as a result of this reorganization.
Like Red Lobster, Tijuana Flats’ new CEO is being credited with potentially turning the struggling ship around. It remains to be seen if he is successful in doing so.
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