In many cases, a Chapter 11 bankruptcy does not mean the end for a restaurant chain.
That’s at least in part because brand names have value, and as long as lenders can work out the finances, there will usually be investors willing to chase a Red Lobster comeback to try to launch a novel seafood chain.
A successful Chapter 11 reorganization can streamline operations, reduce expenses, and establish a more sustainable financial structure, giving a restaurant a second chance at success.
That’s what happened with Red Lobster.
“In 2024, Red Lobster filed for Chapter 11 bankruptcy, citing financial stress from supply chain issues including rising labor costs, unfavorable lease agreements, and losses from ‘all-you-can-eat’ shrimp promotions. The filing allowed the company to restructure its debt, restructure and continue financial support under secured positions, closing leases, and moving toward a long-term recovery path,” Toast reported.
Brand names are important, whether the original operator survives or a new one takes over.
“Think about how difficult it is to build a brand in today’s world,” Greg Portell, a leading partner in the global consumer practice at consulting firm Kearney, told Retail Dive. “It’s really hard. The name itself tends to be a valuable asset in an IP portfolio.”
It makes it surprising that Don Pablo’s, once the second-largest full-service Mexican chain in the United States behind Chi-Chi’s, has become a relic of the past with no open locations.
“In its heyday, it served 20 states with more than 100 locations, making it Chi-Chi’s closest competitor. The first Don Pablo’s location appeared in Texas in the mid-’80s, and due to its success, it began to grow from there—so much so that seven years after its conception, it was already expanding with a Break 1 store,” the news reported.
Don Pablo was famous for using high quality ingredients in its tacos, burritos, fajitas, salads and more.
That was in stark contrast to Taco Bell, the brand most Americans associate with Mexican food.
It was also an affordable sit-down option, possibly at least in part because the meat portions in Mexican restaurants are supplemented by much cheaper ingredients, including rice and beans.
“By 1995, Don Pablo’s had grown to 51 locations in Texas, New Mexico, Kentucky, Ohio, Oklahoma, Michigan, Indiana, Virginia and Maryland. This number nearly doubled by 1998 when those seeking delicious Tex-Mex could choose from 96 Don Pablo’s restaurants.”
That number rose to 120 at the chain’s peak.
Don Pablo formally filed for Chapter 11 bankruptcy protection in 2016, according to PacerMonitor.
“It is reported that the reason for the filing is due to increased competition from ‘fast casual’ Mexican brands and declining interest in casual dining,” WRTV Indianapolis reported at the time.
Some of that competition came from the growing success of Chipotle.
“Fast-casual restaurants have spent the last decade convincing diners that they can offer fresh food and a better experience than fast food, minus the high cost of a wait or sit-down meal, according to Barron’s industry analysis on fast-casual competition and consumer behavior.
of Chipotle 2016 Annual Report The company said 2,250 restaurants In operation as December 31, 2016Chipotle, including International, and other related units, according to the chain’s SEC filing.
Chipotle management has touted pricing compared to traditional restaurants as an advantage.
“Management emphasized that core offerings such as chicken bowls are priced 20-30% lower than comparable fast-casual meals, making its value proposition compelling despite consumer pullback,” Zacks shared on Nasdaq.com.
The competition wasn’t just Chipotle as The Takeout also reports that 1 in 10 US restaurants offer some variation of Mexican food.
Unlike many other brands, however, Don Pablo did not survive Chapter 11 bankruptcy, and unlike Chi-Chi, which is attempting a comeback, as TheStreet’s Fernanda Tronco reports, no attempt has been made to revive the brand.
As an avid fan of Mexican food who no longer considers Taco Bell an option, the rise of Chipotle definitely made me opt for takeout over sitting in a traditional Mexican restaurant.
As I’ve gotten older, that pendulum has shifted back a bit, because I now prefer to sit down and feed myself.
To be fair, Don Pablo’s owner, Avado Brands, survived the 2004 Chapter 11 bankruptcy filing and the subsequent 2007 bankruptcy filing.
“While Avado Brands managed to emerge from bankruptcy the following year with 96 Don Pablo’s restaurants still in operation, it was a short-lived recovery. The company filed a second time in 2007, at which time it had between $1 million and $100 million in liabilities,” according to The Takeout.
More restaurants
It was a bankruptcy filing in 2017, with a new owner, Food Management Partners, that finally put the chain down for good.
“After purchasing the company in 2014, it gradually dropped from Don Pablo’s restaurant lineup. In the years that followed, restaurants began to disappear, and in 2017, the once-popular chain filed for bankruptcy protection again,” according to the website.
The last Don Pablo’s location closed in 2019.
Red Lobster continued after Chapter 11: The seafood chain filed for bankruptcy in 2024, closed underperforming restaurants, restructured, and continued operations in 2025 under new ownership and strategic plans, Yahoo reported.
Hooters of America filed for Chapter 11 but remains active: In March 2025, Hooters filed for Chapter 11 bankruptcy with plans to sell about 100 company-owned restaurants to veteran franchise groups, including the founders; The remaining locations continue to operate, according to Restaurant Dive.
Planta survived bankruptcy through acquisitions: Upscale vegetarian chain Planta filed Chapter 11, and in 2025, its flagship locations were acquired by Anchorage Capital Group, allowing it to continue in major cities, Houlihan Lokey shared.
Bar Louie continued through restructuring and sales: The bar-restaurant chain has filed for Chapter 11, and has preserved dozens of locations and operations through debtor-in-possession financing and sales to new owners, Houlihan Lokey reported.
The Mexican Grill and Cantina at the Border remains open during Chapter 11: After its early-2025 bankruptcy filing, the brand was purchased by Pappas Restaurant Group, and some locations survived, according to Restaurant Dive.
Tijuana Flats Filed for Chapter 11 bankruptcy protection in April 2024About 11 restaurants were closed as part of the restructuring, were acquired by Flatheads LLC, and Successfully exited bankruptcy in January 2025 With plans to refresh its menu, improve operations and expand again, according to FastCasual.com.
Founded in 1985, Lubbock, Texas: Don Pablo opened his first Tex-Mex restaurant in Lubbock, Texas, launching a casual dining brand that would grow nationwide.
1990s, rapid expansion to 120 locations: At its peak in the late 1990s, the chain was approx 120 restaurants across the USmaking it one of the big Mexican casual-dining brands.
2004 and 2007, early bankruptcies and contractions: The original ownership filed for bankruptcy and reduced the number of restaurants. The brand changed hands and competition gradually increased over the next several years.
2014, acquired by Food Management Partners (FMP).: After years of closures, the rest of the 34-unit chain was acquired by Food Management Partners, the restaurant operator looking to turn the brand around.
2016, major bankruptcy filings and closings: In 2016, Don Pablo’s parent companies filed for bankruptcy protection, closing several locations.
June 24, 2019, the last US location closes: Last at Don Pablo Restaurant Deptford Township, New JerseySuddenly closed its doors, ending the operational history of the brand.
Source: Massed
RELATED: Upscale steakhouse chain shutters dozens of locations
This story was originally published by TheStreet on January 2, 2026, where it first appeared in the Restaurants section. Add TheStreet as a preferred source by clicking here.
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