Less than a week after abruptly shuttering four-dozen units in its home state, California-based Rubio’s Coastal Grill is seeking Chapter 11 bankruptcy protection. 

The fast-casual “Fresh-Mex” chain has between $100 million to $500 million in liabilities and $10 million to $50 million in assets, according to a bankruptcy petition filed on Wednesday. It has been negatively affected over the past few years by diminishing traffic, stemming from the work-from-home trend that has sustained coming out of the pandemic. Rising food and utility costs, along with this spring’s significant minimum wage hike in California, have only added to the financial pressures. 

“Despite best efforts to right-size the company, the continued challenging economic conditions have negatively impacted its ability to meet the demands of its debt burden,” Nicholas Rubin, the chain’s chief restructuring officer, said in a statement. “The company believes the best path forward for Rubio’s is through a court-supervised sale process that will position the brand for long-term success to grow and flourish.”

Rubio’s has a commitment from its existing lender to provide debtor-in-possession financing and has “more than adequate liquidity” to meet all of its operating needs during the sale process, he added. It plans to enter into a stalking horse purchase agreement to sell its business to an entity formed and controlled by its existing lender. It also will file a motion to allow other interested buyers to submit bids to purchase the assets being sold. The sale transaction is expected to be completed within 75 days. 

The Chapter 11 filing comes just a few days after the company closed 48 underperforming locations—13 in the San Diego area, 24 in the Los Angeles area, and 11 in northern California—citing the “rising cost of doing business” in the state. That left it 86 units in California, Arizona, and Nevada. Daily operations at those remaining locations will continue with business as usual. 

Rubio’s finished 2022 with 152 stores, $217.3 million in sales, negative $7.8 million EBITDA, and a net loss of $15.6 million. In 2023, it ended with 145 restaurants, $218.3 million in sales, negative $9 million EBITDA, and a net loss of $20 million.

Rubio’s previously filed for bankruptcy in 2020, when the pandemic forced it to close 26 restaurants and exit the Colorado and Florida markets. At the time, the brand had 167 locations and was saddled with $82.3 million in debt. In the wake of the COVID crisis, roughly 45 percent of the restaurant support center and field management were furloughed as well as more than 1,400 restaurant workers. Just over two-dozen underperforming units permanently shut down between May and June 2020. In addition to the pandemic, Rubio’s cited the saturation of the fast-casual market, minimum wage increases, and the growth of off-premises as factors that contributed to the bankruptcy.

To restore operating margins, Rubio’s has worked on store refreshes, the launch of a new mobile app and website, development of a new menu, implementation of price increases and promotions, and optimization of staffing at the corporate and store level. The company has also worked with Hilco Real Estate since November 2023 to negotiate concessions with landlords. After its closures, Rubio’s will focus on retaining and gaining market share in the Southern California and Arizona markets.

The chain was launched in 1983 by founder Ralph Rubio, who will remain on board throughout the current bankruptcy process. It went public in 1999 but was privatized in 2010 following a $91 million acquisition by Mill Road Capital. Over the years, the brand has evolved, transitioning from “Rubio’s, Home of the Fish Taco” to “Rubio’s Baja Grill,” then to “Rubio’s Fresh Mexican Grill,” and finally becoming “Rubio’s Coastal Grill” in 2014. 

With Wednesday’s filing, the company joins a growing list of restaurant concepts seeking bankruptcy protection. Red Lobster declared bankruptcy last month, following substantial retrenchment in its operations. This year has also seen bankruptcy filings from Party Fowl, Boxer Ramen, Tijuana Flats, Sticky Fingers, Oberweis Dairy, and Foxtrot and Dom’s Kitchen. Corner Bakery Café filed for bankruptcy in 2023, along with major franchisees from Burger King, Wendy’s, CKE, Popeyes, Denny’s, and McDonald’s.