Taco Bueno announced in September that it shuttered 16 restaurants across Texas, Oklahoma, Kansas, and Missouri, following an in-depth review of the company’s entire portfolio. Now, the 51-year-old chain has filed for federal bankruptcy protection Tuesday after striking an agreement with Taco Supremo, LLC, an affiliate of Sun Holdings, Inc.
Before the Chapter 11 filing, the Sun Holdings affiliate acquired all of Taco Bueno’s outstanding bank debt and provided a commitment for up to $10 million in debtor-in-possession financing that, subject to court approval, will support Taco Bueno’s operations during the financial restructuring process. Under the terms, Sun Holdings would become the owner of Taco Bueno through a debt-for-equity swap.
According to filings, 169-unit Taco Bueno claimed between $10 million and $50 million in assets and between $100 million and $500 million in liabilities.
"We are pleased to have reached this agreement with Sun Holdings on the terms of a financial restructuring that will strengthen our balance sheet and position our company for continued success. We also look forward to welcoming Sun Holdings as the new owner of Taco Bueno," said Taco Bueno CEO Omar Janjua, who joined the chain from Krystal in late March.
Sun Holdings is a multi-concept franchisee based in Dallas with more than 800 locations across eight states, including 296 Burger Kings, 145 Popeyes, 87 Arby's, 21 Golden Corrals, 32 Cici's Pizzas, and 18 Krispy Kreme stores. Sun Holdings touts more than 20 years of operating experience in the quick-service arena.
Upon Taco Bueno’s completion of its restructuring, Sun Holdings said it would invest in remodeling Taco Bueno locations, increasing brand initiatives, and enhancing the customer experience.
“During this court-supervised process, we will continue to focus on initiatives to grow the Taco Bueno brand, while remaining true to our roots, delivering great-tasting meals to our customers in an inviting and comfortable environment,” Janjua added. “We thank our dedicated employees for continuing to provide an authentic, better-tasting Tex-Mex experience and unmatched customer service to guests as we've done for more than 50 years."
During the restructuring process, Taco Bueno said it expects to continue operating restaurants across Texas, Oklahoma, Arkansas, Kansas, Louisiana, and Missouri, which includes restaurants independently owned and operated by franchisees that are not a part of the Chapter 11 proceedings.
"Taco Bueno is a great brand with loyal customers, and we have long admired their commitment to serving authentic Tex-Mex cuisine made by real cooks, in real kitchens and providing unmatched customer service," added Guillermo Perales, chief executive officer and founder of Sun Holdings Inc., in a statement. “We know quick service and the customer base well, and we see considerable opportunities to invest across the Taco Bueno footprint to enhance the customer experience and drive long-term growth for the brand. We look forward to working with Omar, the rest of the Taco Bueno management team and all the hard-working employees to continue serving Buenoheads well into the future."
In conjunction with the Chapter 11 process, Taco Bueno filed a number of customary motions with the bankruptcy court for the Northern District of Texas seeking authorization to support its operations during the financial restructuring process, including authority to continue to pay employee wages and provide health and other benefits, and to pay vendors and suppliers in the ordinary course for all goods and services provided on or after the chapter 11 filing date. The company expects to receive approval for these requests, it said.
Taco Bueno was founded in 1967 in Abilene, Texas. In December 2015, TPG Growth, the middle market and growth equity investment platform of TPG, purchased then-177-unit Taco Bueno for an undisclosed amount.
Janjua left the same post at Krystal to join Taco Bueno and oversee a team of corporate executives and more than 2,700 employees from its headquarters in Irving, Texas. Taco Bueno relocated to the larger base in 2017. Janjua brought more than 35 years of quick-service experience to the position. Before Krystal, he was president and COO for Sonic, where he oversaw operations, training, franchising, developing and quality assurance. Janjua also served as vice president and chief operating officer at Steak ‘n Shake after 18 years with Pizza Hut, where he provided support to 75 franchise groups operating 2,600 restaurants in 27 states.
In other recent executive moves, the brand brought on Tony Darden, former VP of operations for Panera, as COO in May 2017. It also tapped Mary Ellen Mullens as chief people officer this past May. She served as senior director of human resources for Sonic for five years before joining Taco Bueno.
Taco Bueno said earlier in the year it would focus on its core business and providing Tex-Mex for lunch and dinner through a new customer-inspired menu. One example was a Pick 3 for $2.99 Menu, introduced in March, where customers could build a combo meal under the $3 price point.