Pappas Restaurants to buy On The Border out of bankruptcy
Pappas Restaurants will purchase On The Border Mexican Grill & Cantina out of bankruptcy, after successfully bidding for the company at auction, the operator said in a Wednesday press release. On The Border filed for Chapter 11 in early March.
The transaction, subject to court approval, is expected to close in the next few weeks. OTB Lender, an affiliate of Pappas Restaurants, previously provided $10 million in debtor-in-possession financing to fund the brand throughout the Chapter 11 process, positioning itself as a stalking horse bidder.
The acquisition will help the Houston-based company, which has over 80 units across nine concepts, expand its presence nationally and boost its store count with the addition of 60 company-owned On The Border restaurants.
Pappas Restaurants will look to boost On The Border's menu, operations and guest experience, while 'honoring the brand's history and fan-favorite offerings,' the press release said.
Pappas will use its experience with high-performing restaurant brands to apply its 'proven operational model and commitment to quality and hospitality to help strengthen and modernize On The Border locations.' Pappas diversified its portfolio over the past few decades, expanding into new concepts and entering airports.
On The Border has a value-driven approach that complements Pappasitas Cantina's menu offering of fajitas, hand-shaken margaritas and atmosphere, according to the press release.
'On The Border is a brand with deep heritage and loyal guests, and we see tremendous opportunity to invest in its future,' Mike Risso, CEO of Pappas Restaurants, said in a statement. 'Our shared Texas roots and passion for hospitality make this a natural fit."
On The Border filed for bankruptcy protections, citing the difficult macroeconomic environment, labor shortages and creditor enforcement actions, among other issues. In February, the chain closed 40 underperforming restaurants that had financial costs that were burdensome for the company
At its height, On The Border had 150 units in the U.S. and internationally. It now operates in 18 states and has 20 franchised locations in the U.S. and South Korea, in addition to its company-owned units.
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On the Border is the latest casual chain to file for Chapter 11
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