Rubio’s Coastal Grill, which days ago closed 48 of its restaurants, is filing for Chapter 11 bankruptcy. (K.C. Alfred/The San Diego Union-Tribune)
By Lori Weisberg | San Diego Union-Tribune
Rubio’s Coastal Grill, which began in San Diego more than 40 years ago and once boasted close to 200 restaurants, announced Wednesday it is filing for bankruptcy protection with the goal of selling the business.
In a news release issued by the company’s public relations firm, Rubio’s said its existing 86 restaurants will remain operating while the Chapter 11 bankruptcy process proceeds.
Also see: Rubio’s closes 48 restaurants in California, citing ‘business climate’
This latest filing marks the second one in a span of less than four years, and comes just days after Rubio’s abruptly closed 48 of its restaurants in Southern California.
The company, which has hired the Los Angeles-based crisis management public relations firm Sitrick and Co., declined to provide specifics on which restaurants closed. But former employees provided a list of the most recent closures on Reddit:
Adelanto, Anaheim Hills, Brea, Cerritos, Eastvale, Fountain Valley, Fullerton, Huntington Beach (Beach Boulevard), La Habra, Lake Forest, Lakewood, Long Beach, Marina Del Rey, Ontario, Orange (N. Tustin St.), Oxnard, Pasadena, Placentia, Rancho Santa Margarita, Santa Ana (at the 55 Freeway along 17th Street), Santa Clarita, Seal Beach, Tustin, Ventura and Whittier. Another 13 closed in San Diego County.
Nicholas Rubin, the company’s chief restructuring officer, called Rubio’s “one of the legendary fast casual chains.”
“Despite the company’s 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,” he said in a statement provided to the San Diego Union-Tribune. “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.”
Rubin said its existing lender has agreed to provide debtor financing and has enough liquidity to continue operating the restaurants during the sale process.
As it did several days ago, Rubio’s blamed its declining performance on what it said is the difficulty in doing business in California, where a recent wage hike to $20 an hour recently went into effect for fast food workers at larger chains.
A number of fast food chains have already raised prices in response to the wage increase, while others are taking a wait-and-see approach.
Rubio’s said it plans to enter into what is known as a stalking horse purchase agreement to sell the business to an entity that would be formed and controlled by its existing lender. It expects the sale to be completed within 75 days. It will be seeking court approval to continue operations that it said will allow employees to continue receiving their pay and benefits.
Ralph Rubio, the co-founder of the Mexican fast casual chain known as the home of the original fish taco, will continue with the company, the news release said, and will “provide his usual inspiration and energy going forward,” the release said.
The company celebrated its 40th anniversary last year, selling its original fish taco for just 99 cents on Jan. 25.
Rubio has declined to comment on the chain’s financial troubles, which have been building for years, and has not responded to an interview request from the Union-Tribune.
Even with 86 remaining Rubio’s outlets in California, Arizona and Nevada, the chain is a fraction of what it once was. A little less than four years ago, the company had as many as 170 locations in the U.S.
Just days ago, San Diego restaurant analyst John Gordon predicted that a bankruptcy filing was inevitable.
“Rubio’s had its day but once it left the publicly traded markets and (current owner) Mill Road Capital took it over, it went into maintenance mode,” Gordon told the Union-Tribune. “Ralph Rubio, the founder, continued to consult with them but nothing much happened.”
Originally published at San Diego Union-Tribune