Beloved Mexican restaurant chain Abuelo’s goes bankrupt, shutting down more than half its stores

Abuelo’s, the family-style Mexican restaurant that has been serving enchiladas and fajitas for 36 years, has filed for bankruptcy protection. The move follows years of falling sales, rising costs, and a shrinking footprint across the US, reports Pennlive.com. At its height, Abuelo’s operated 40 restaurants nationwide. Today, just 16 remain open.

The company, owned by Food Concepts International, quietly filed in the US Bankruptcy Court for the Northern District of Texas. Court documents show debts and liabilities estimated between $10 million and $50 million.

Food Concepts International also filed for bankruptcy last month, and the two companies have asked the court to merge their cases.

“Strategic restructuring,” says Abuelo’s

“This decision is a part of a strategic reconstructing process to strengthen our long-term financial position,” Abuelo’s said in a statement shared with Restaurant Business. “We will continue normal operations and remain committed to maintaining stability for our employees, vendors, and customers. Through this time, our loyal customers can join us and expect the same quality and hospitality as we’ve always provided,” the statement further read.

The chain insists it is not shutting down completely. But the decision signals how tough the casual dining sector has become - especially for regional brands.

Decline started years ago

According to FSR Magazine, traffic at Abuelo’s restaurants fell nearly 6% in 2023, and the slide continued into 2024. The company responded by shutting down weaker stores and cutting overhead.

Still, that was not enough. Chron reported the brand suffered a 15% sales drop last year, along with spiking food and labor costs. Staffing shortages added more pressure, and extreme summer heat in 2024 forced several temporary closures, costing around $500,000 in lost revenue.

Founded in Amarillo, still standing in seven states

Abuelo’s began in Amarillo, Texas, back in 1989, known for its courtyard-style dining rooms and made-from-scratch dishes. The chain still operates in Arizona, Arkansas, Florida, Kansas, Oklahoma, South Carolina, and Texas, reports Cleveland. For loyal fans, the company says business will go on as usual - at least for now.

FAQs

1. Why did Abuelo’s file for bankruptcy?

Due to falling sales, higher costs, and ongoing staffing shortages.

2. How many Abuelo’s locations are still open?

Sixteen locations remain across seven US states.

3. Will Abuelo’s close all its restaurants?

No, the company says it will continue normal operations during restructuring.

4. When was Abuelo’s founded?

It was founded in 1989 in Amarillo, Texas.