Nation’s Restaurant News: Don Pablo’s Files for Bankruptcy

The restaurant bankruptcy filing trend continues with the second filing this week and third in the past seven days. According to a recent Nation’s Restaurant News article, Rita Restaurant Corp., which operates the 12-unit Mexican chain Don Pablo’s, has filed for bankruptcy protection. The company has mentioned the increased competition of fast-casual Mexican chains and the weakness of the fast-casual industry in general for the filing.

The company said in a statement that it plans to “restructure its debts and liabilities and recapitalize the business” while continuing to operate “many of the remaining restaurants.”

Peter Donbavand, vice president of business development for Rita Restaurants, explains the intense pressure the restaurant industry is under from external sources, “Increasing minimum wage requirements, more expensive employee benefit plans and rent hikes in many locations all add to mounting expenses. Add to that the recent slowdown in industry-wide sales and at our restaurants, and we cannot continue to operate under current obligations.”

Don Pablo’s previously filed for bankruptcy back in 2008, and at one point they had reported 120 locations around the country, being one of the biggest fast-casual Mexican restaurants in the U.S.

Restaurants such as Chipotle Mexican Grill, Qdoba Mexican Eats, Moe’s Southwest Grill, and Panchero’s Mexican Grill have all created an extremely competitive landscape in the fast-casual Mexican segment, while other restaurants including Chili’s Grill & Bar and Applebee’s Grill & Bar have started to add Mexican product offerings to their menus, which have both added to Don Pablo’s recent struggles.