Sometimes customers have no idea that a restaurant they like has financial problems. The signs may have been there if you looked closely, however.
Was staffing lower than normal and cleanliness not up to usual standards? Were certain menu items often out of stock or maybe of slightly lower quality than they used to be?
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Struggling restaurants tend to cut corners. That’s almost never a good idea because degrading the customer experience causes people to stay away.
This becomes a vicious cycle. If people have a worse experience, they are less likely to come back. They may write off a one-time bad experience, but when it becomes a pattern, the end approaches.
Fans of On the Border likely missed signs that the chain was in financial trouble.
As a regular visitor to the chain, however, in retrospect the signs were there. The chain never really recovered from the Covid pandemic, and wait times were extended.
In addition, the chain downgraded some of its menu items and often appeared to have insufficient staffing to operate its restaurants. At the very busy On the Border in Kissimmee, FL, whole sections of the restaurant were often not staffed.
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Located in a plaza where rivals like Miller’s Ale House and Olive Garden had lines out the door, the chain would often have a small waiting list and many tables open.
That’s anecdotal, but On the Border has been struggling and filed for Chapter 11 bankruptcy on March 4. On that day, the chain began shutting down dozens of restaurants as it worked on a rescue plan.
Customers may have noticed a subtle decline in On the Border’s menu items.
Image source: Shutterstock
On the Border may have a hero
On the Border closed over one third of its locations (about 40) at the time of its Chapter 11 filing. The court filing indicated the move was made to strengthen the chain’s financial position and maximize value for shareholders.
That’s a pretty typical choice of language in a restaurant Chapter 11 bankruptcy filing. On the Border filed Chapter 11 bankruptcy in United States Bankruptcy Court for the Northern District of Georgia.Â
“The company intends to use the proceedings to drive operational improvements and pursue a sale of substantially all of its assets,” it shared in the court filing.
On the Border’s future, however, was hinted at in the next part of the filing.
“The company has secured $10 million in Debtor-in-Possession financing with OTB Lender, LLC, an affiliate of Pappas Restaurants, Inc., to fund the Chapter 11 process. Additionally, the Company anticipates entering into an asset purchase agreement with an affiliate of OTB Lender, LLC, shortly after the commencement of the Chapter 11 cases,” the company shared.
More closings:
Popular retail chain to close unprofitable store locationsBankrupt retail chain unloads store leases, key assetPopular discount retailer files bankruptcy, closes all stores
Pappas Restaurants has essentially put itself in the lead position to acquire On the Border. They could end up as the winning bidder, but in theory, another company could offer more for the assets.
That’s not common, but if it happened, the bankruptcy court would determine which offer is better for shareholders.
Who is Pappas Restaurants?
Pappas Restaurants operates a variety of different formats, mostly under variations of the Pappas name.
“The Pappas brothers are Houston natives with a passion for exciting, diverse, and delicious food. When they opened their first restaurant, Dot Coffee Shop, they set out to serve only the highest quality product and ensure that every guest that walks through our doors feels like family. Since then, the Pappas Restaurant family has grown. We’ve opened more than 100 restaurants and become a leader in the hospitality industry,” the company shared on its website.
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It operates under the Pappadeaux Seafood Kitchen, Pappasito’s Cantino, Pappas Bros. Steakhouse, Pappas Delta Blue Smokehouse, Pappas Seafood House, Pappas Burger, Pappas BarBQ, Dot, and Little’s Oyster Bar brands. Â
The company has not shared whether it will operate On the Border under the Pappasito’s Cantina brand or keep the restaurant under the existing name.
“On the Border’s restaurants will remain open and operating as usual during the Chapter 11 process, continuing to serve authentic Border-Style meals in generous portions, as it has since 1982,” according to the court filings.
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