Rubio’s Coastal Grill has filed for Chapter 11 bankruptcy protection, following the closure earlier this week of nearly 50 California locations, according to a report from Nation’s Restaurant News.
The move, aimed at facilitating the sale of the 41-year-old business, comes as restaurants across the country grapple with the economic challenges brought on by the Biden administration’s policies, often referred to as “Bidenomics.”
Nicholas Rubin, Rubio’s chief restructuring officer, stated that despite efforts to streamline the company, the ongoing economic difficulties have made it hard for Rubio’s to manage its debt.
These challenges include fewer customers due to work-from-home trends, higher food and utility costs, and a significant increase in California’s minimum wage, which jumped by 25% to $20 an hour on April 1.
Rubin believes that a court-supervised sale process is the best way forward for Rubio’s, allowing the brand to flourish in the long run.
Rubio’s Coastal Grill Becomes Latest Victim Of CA $20 Minimum Wage Law.
48 restaurants close due to ‘Rising cost of doing business’@CaliforniaGlobe https://t.co/4M1nVBrvGS pic.twitter.com/JlYk7gvJVK
— California Globe (@CaliforniaGlobe) June 5, 2024
The company has secured financing from its lender and plans to sell its assets to an interested buyer, with other companies also having the chance to bid. Throughout this process, Rubio’s will continue to operate and pay its employees, and customers can still use their gift cards and rewards at the remaining 86 locations.
This isn’t the first time Rubio’s has faced financial difficulties.
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In 2020, the company filed for bankruptcy after closing several locations during the pandemic.
Over the past decade, Rubio’s has closed 48 locations, while its competitors saw an average sales increase of 11% last year.
Ralph Rubio, who founded the company in 1983, will stay with Rubio’s during the bankruptcy process.
JUST IN: Beloved restaurant Rubio's Coastal Grill is closing 48 locations in California due to inflation and a minimum wage increase.
Don't worry, folks. The economy has never been better. Biden and @mcuban said so.
The announcement came after CA Governor Gavin Newsom signed a… pic.twitter.com/tSNgDJ4K4U
— Collin Rugg (@CollinRugg) June 4, 2024
In 2015, the chain changed its name from Rubio’s Fresh Mexican Grill to Rubio’s Coastal Grill to focus on seafood and stand out in the crowded fast casual Mexican segment.
Rubio’s is just one of many restaurant chains seeking bankruptcy protection as the industry navigates the post-pandemic recovery, high costs, rising interest rates, and more selective consumers.
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Red Lobster, Party Fowl, Boxer Ramen, Tijuana Flats, Sticky Fingers, Oberweis Dairy, and Foxtrot/Dom’s Kitchen have all filed for bankruptcy this year, with overall U.S. corporate bankruptcy filings reaching a 13-year high.
