Mexican restaurant bankruptcies surge: Is the US dining scene oversaturated with burritos and tacos? Data reveals…
Mexican restaurants are facing challenges such as oversaturation and reduced consumer spending, leading to several Chapter 11 bankruptcies. However, not all is bleak, as a survey shows 45% of these Mexican establishment saw sales growth in 2024.
Mexican food, with its burritos and tacos, has been a favourite among American diners, but a string of Chapter 11 bankruptcy filings has created concern over whether the market is over saturated, according to a report by The Street.
It added that data shows that customers have been cutting back on eating out due to economic factors, and over saturation is only one part of the problem.
The report cited a survey by el Restaurante, which showed that 45 per cent of Mexican restaurants saw their sales expand in 2024. This is positive news, as compared to the 13 per cent who said their sales were flat, and 32 per cent who saw sales dip.
Why the concern for Mexican restaurants?
The latest Mexican restaurants to file for Chapter 11 bankruptcy were El Burro Loco, Abuelo’s Mexican Restaurant, and the On the Border chain, where, according to the restructuring officer, macroeconomic factors have been the biggest hit.
“On The Border has been weighed down in recent years by macroeconomic factors that have negatively impacted the company,” Jonathan Tibus, restructuring officer for OTB Holdings, said in On The Border's Chapter 11 Bankruptcy filing told The Street.
Why have Mexican restaurants filed for bankruptcy? What we know…
- According to the report OTB filed for Chapter 11 bankruptcy in March 2025. It cited data from PaceMonitor to report that the chain closed 40 underperforming locations, and has 60 that still operate.
- In April 2024, Tijuana Flats filed for bankruptcy and closed 11 restaurants. The brand changed hands in earky 2025, PaceMonitor data showed, it added.
- Later in June 2024, Rubio’s Coastal Grill closed 48 locations in California and filed to restructure.
- And more recently, Abuelo’s Mexican Restaurant, in September 2025 cut 24 locations (16 now running) citing rising costs, labour challenges, falling sales.
What's the future for El Burro Loco?
The bankruptcy filing show that El Burro Loco Food Corp voluntarily filed for Chapter 11 bankruptcy in Florida on October 10, 2025, ththe Report said using Inforupcy data.
The restructuring plan deadline is January 8, 2026, with aim to reorganise debts and return to profitability, it added.
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