Chipotle rival Mexican chain closed all its restaurants

Daniel Kline

7 min read

In many cases, a Chapter 11 bankruptcy does not mean the end for a restaurant chain.

That’s at least partially because brand names have value, and as long as the finances can be worked out with creditors, there will usually be more investors willing to get behind a Red Lobster comeback than those who might attempt to launch a novel seafood chain.

A successful Chapter 11 reorganization can streamline operations, reduce expenses, and establish a more sustainable financial structure, giving the restaurant a second chance at success.

That’s what happened with Red Lobster.

“In 2024, Red Lobster filed for Chapter 11 bankruptcy, citing financial strain from rising labor costs, unfavorable lease agreements, and supply chain issues, including losses from an ‘all-you-can-eat’ shrimp promotion. The filing allowed the company to restructure its debt, renegotiate leases, close underperforming locations, and secure financial support, enabling continued operations and a path toward long-term recovery,” Toast reported.

Brand names matter, whether the original operator survives or a new one takes over.

“Think about how hard it is to build a brand in today’s world,” Greg Portell, lead partner in the global consumer practice of consulting firm Kearney, told Retail Dive. “It’s really difficult. The name itself tends to be the valuable asset in an IP portfolio.”

That makes it surprising that Don Pablo’s, once the second-largest full-service Mexican chain in the United States behind Chi-Chi’s, remains a relic of the past with no open locations.

“During its heyday, it served 20 states with over 100 locations, which made it the closest competitor to Chi-Chi’s. The first Don Pablo’s location appeared in Texas in the mid-’80s, and due to its success, it started growing from there — so much so that seven years after its conception, it was already gaining traction with 10 stores,” Newsbreak reported.

Don Pablo’s was famous for its use of high-quality ingredients in its tacos, burritos, fajitas, salads, and more.

That was a stark contrast to Taco Bell, the brand most Americans associated with Mexican food at the time.

It was also an affordable sit-down option, likely at least partially because meat portions at Mexican restaurants are supplemented by much cheaper ingredients, including rice and beans.

“By 1995, Don Pablo’s had grown to 51 locations across Texas, New Mexico, Kentucky, Ohio, Oklahoma, Michigan, Indiana, Virginia, and Maryland. This number had nearly doubled by 1998 when those looking for tasty Tex-Mex could choose from 96 Don Pablo’s restaurants,” according to The Takeout.

That number rose to 120 at the chain’s peak.

Don Pablo’s formally filed for Chapter 11 bankruptcy protection on 2016, according to PacerMonitor.

“It is reported that the reason for the filing is due to the increased competition from ‘fast casual’ Mexican brands and a decreased interest in casual dining,” WRTV Indianapolis reported at the time.

Some of that competition came from the growing success of Chipotle.

“Fast‑casual restaurants have spent the past decade convincing diners they could deliver fresher food and a better experience than fast food, minus the wait or high price of a sit‑down meal, according to a Barron’s industry analysis on fast‑casual competition and consumer behavior.

Chipotle’s 2016 annual report states the company had 2,250 restaurants in operation as of December 31, 2016, including Chipotle, international, and other related units, according to the chain’s SEC filings.

Chipotle management has pushed pricing relative to traditional restaurants as an advantage.

“Management underscored that core offerings, such as the Chicken Bowl, are priced 20-30% below comparable fast-casual meals, making its value proposition compelling despite consumer pullbacks,” Zacks shared on Nasdaq.com.

The competition was not just Chipotle as The Takeout also reports that 1 in 10 U.S. restaurants serve some variation of Mexican cuisine.

Unlike many other brands, however, Don Pablo’s did not survive Chapter 11 bankruptcy, and unlike Chi-Chi’s, which is attempting a comeback, as TheStreet’s Fernanda Tronco reported, no efforts have been made to revive the brand.

As an avid fan of Mexican food who no longer considers Taco Bell an option, Chipotle’s rise certainly led me to opt for takeout over sitting down in a traditional Mexican restaurant.

As I have gotten older, that pendulum has moved back a bit, as I’m now much more likely to want to sit down and be served a meal.

<em>Don Pablo's did not survive Chapter 11 bankruptcy.</em>Shutterstock — *Don Pablo’s did not survive Chapter 11 bankruptcy.*Shutterstock

To be fair, Don Pablo’s owner, Avado Brands, did survive a 2004 Chapter 11 bankruptcy filing and a later one in 2007.

“While Avado Brands managed to exit bankruptcy the following year with 96 Don Pablo’s restaurants still in operation, it was a short reprieve. The company filed for a second time in 2007, at which point it had between $1 million and $100 million in liabilities,” according to The Takeout.

More Restaurants

It was this bankruptcy filing in 2017, under a new owner, Food Management Partners, that finally put the chain down (seemingly) for good.

“After purchasing the company in 2014, it gradually chipped away at Don Pablo’s restaurant lineup. In the following years, restaurants started to disappear, and in 2017, the once-popular chain yet again filed for bankruptcy protection,” according to the website.

The final Don Pablo’s location closed in 2019.

Red Lobster continued after Chapter 11: The seafood chain filed for bankruptcy in 2024, closed underperforming restaurants, reorganized, and continues operating in 2025 under new ownership and strategic plans, Yahoo reported.
Hooters of America filed Chapter 11 but remains active: In March 2025, Hooters filed for Chapter 11 bankruptcy with a plan to sell about 100 company‑owned restaurants to experienced franchisee groups including the founders; remaining locations continue operating, according to Restaurant Dive.
Planta survived bankruptcy through acquisition: Upscale vegan chain Planta filed Chapter 11, and in 2025, its key locations were acquired by Anchorage Capital Group, allowing it to continue in major cities, shared Houlihan Lokey.
Bar Louie continued via restructuring and sale: The bar‑restaurant chain filed for Chapter 11, and through debtor‑in‑possession financing and sale to new owners, preserved dozens of locations and operations, reported Houlihan Lokey.
On the Border Mexican Grill & Cantina remains open during Chapter 11: After its early‑2025 bankruptcy filing, the brand was purchased by Pappas Restaurant Group, and some locations survived, according to Restaurant Dive.
Tijuana Flats filed for Chapter 11 bankruptcy protection in April 2024, closed about 11 restaurants as part of restructuring, was acquired by Flatheads LLC, and successfully exited bankruptcy in January 2025 with plans to refresh its menu, improve operations, and expand again, according to FastCasual.com.

1985, founded in Lubbock, Texas: Don Pablo’s opened its first Tex‑Mex restaurant in Lubbock, Texas, launching a casual dining brand that would grow nationwide.
1990s, rapid expansion to 120 locations: At its peak in the late 1990s, the chain had about 120 restaurants across the U.S., making it one of the larger Mexican casual‑dining brands.
2004 and 2007, early bankruptcies and contraction: The original ownership filed for bankruptcy and downsized the number of restaurants. The brand changed hands and gradually shrank over the next several years as competition increased.
2014, acquired by Food Management Partners (FMP): After years of closures, the remaining 34‑unit chain was acquired by Food Management Partners, a restaurant operator looking to turn around the brand.
2016, major bankruptcy filing and closures: In 2016, Don Pablo’s parent companies filed for bankruptcy protection, closing numerous locations.
June 24, 2019, last U.S. location closes: The final Don Pablo’s restaurant in Deptford Township, New Jersey, abruptly closed its doors, ending the brand’s operational history.
Source: Mashed

This story was originally published by TheStreet on Jan 2, 2026, where it first appeared in the Restaurants section. Add TheStreet as a Preferred Source by clicking here.

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