Abuelo’s, a long-established Mexican restaurant chain, has filed for bankruptcy and announced the closure of 24 out of its 40 locations in the United States. This move leaves the chain with only 16 operational stores. The filing took place in the U.S. Bankruptcy Court for the Northern District of Texas, where the company cited various challenges, including declining sales, rising operational costs, staffing issues, and shifting consumer preferences.
Founded 36 years ago and owned by Food Concepts International, Abuelo’s disclosed debts and liabilities ranging from $10 million to $50 million. In early September, Food Concepts International also initiated bankruptcy proceedings, prompting both entities to request a consolidation of their cases in court.
Abuelo’s expressed its commitment to maintaining stability for its employees, vendors, and patrons throughout the restructuring process. In a statement obtained by Restaurant Business, the company emphasized, “This decision is a part of a strategic reconstructing process to strengthen our long-term financial position. Through this time, our loyal customers can join us and expect the same quality and hospitality as we’ve always provided.”
The challenges faced by the restaurant chain have been evident over the past few years. According to FSR Magazine, traffic to Abuelo’s locations dropped by 5.9% in 2023 and continued to decline into 2024. In response to the decreasing sales, the company has taken steps to close underperforming stores and reduce overhead costs.
Currently, Abuelo’s operates in a limited number of states, including Arizona, Arkansas, Florida, Kansas, Oklahoma, South Carolina, and Texas. The company’s strategic decisions aim to navigate the evolving landscape of the restaurant industry while retaining its loyal customer base.
As the restructuring process unfolds, the focus remains on sustaining operations and adapting to the challenges posed by a competitive market. The future of Abuelo’s will depend on how effectively it can address these issues and regain its footing in the dining sector.
