Tijuana Flats announced Friday it filed bankruptcy and was sold to new ownership as part of its restructuring process.

The Central Florida–based fast casual was acquired by Flatheads, LLC after being owned by TJF, LLC (an entity backed by AUA Private Equity Partners).

Founded in 1995, Tijuana Flats has 91 stores (65 corporate and 26 franchised) in Florida, Alabama, North Carolina, and Tennessee. That’s after shuttering 11 units during the week leading up to bankruptcy, which was the result of a unit-by-unit analysis of financial performance, occupancy costs, and market conditions, according to executives. Going back to January, 29 corporate stores have permanently closed overall. At its peak, the chain had more than 120 company-run outlets.

Tijuana Flats said its bankruptcy followed “a confluence of adverse events.” In 2021 and 2022, previous management looked to increase revenue and profit by expanding menu options. The shift had the opposite effect. Additional options meant more equipment, staffing, and time to prepare, which led to slower food delivery times, higher costs, growing dissatisfaction among guests, and a drop in sales. Also, profit margins were squeezed because of inflation and changes in consumer spending habits in the post-COVID environment. Raising prices had limited success.

In May 2023, lender Truist Bank required a $1.2 million interest payment in addition to $250,000 quarterly principal obligations. This stripped Tijuana Flats of much-needed working capital.

The chain began exploring strategic options in November 2023, including a sale. This is the second time Tijuana Flats has been sold in its 29-year existence. The other event came in 2015 when AUA bought the concept from the founding investor group.

Joe Christina, who’s served as CEO since November 2022, will continue leading the company.

“Our company is excited by the new ownership group’s plan to reinvest, focus, and emphasize the things that originally brought so many people to love Tijuana Flats,” Christina said in a statement. “We understand the immediate financial actions taken by them to ensure the long-term health of this great and iconic brand.”

Flatheads chose to invest in Tijuana Flats because of its “immense brand recognition, strong following and customer loyalty, plus future potential.” The group wants to continue the fast casual’s legacy by going back to its roots and building upon customer service, food consistency, quality controls, speed of service, serving size, and the in-store experience. This means renovations and refreshes for many of the restaurants. To start April, Tijuana Flats introduced a new menu and updated its off-premises packaging to enhance the product and improve delivery times.

“Our new partners share a desire to continue the corporate culture and vision of Tijuana Flats, protecting and supporting our team members and franchisees so they can best serve their customers,” Christina said. “With this new ownership structure, and a robust strategic plan, we are well-positioned for an emergence in the fast casual space. I look forward to evolving and expanding our brand and supporting the communities we serve.”

The news comes not too long after Oberweis Dairy, a 109-year-old company, declared bankruptcy. The roughly 40-unit ice cream brand is currently searching for a buyer.

Fast Casual, Finance, Franchising, Story, Tijuana Flats