In many cases, a Chapter 11 bankruptcy does not mean the end of a restaurant chain.
That’s at least in part because brand names have value, and as long as the finances can be worked out with lenders, there will usually be more investors willing to get behind a Red Lobster comeback than those who might try to launch a new seafood chain.
A successful Chapter 11 reorganization can streamline operations, reduce expenses, and establish a more sustainable financial structure, giving the restaurant a second chance at success.
That’s what happened to Red Lobster.
“In 2024, Red Lobster filed for Chapter 11 bankruptcy, citing financial pressures from rising labor costs, unfavorable leases and supply chain issues, including losses from an all-you-can-eat shrimp promotion.” The filing allowed the company to restructure its debt, renegotiate, close and continue lease operations, close and continue lease operations. and a path to long-term recovery,” Toast reported.
The brand name matters whether the original operator survives or a new one takes over.
“Think about how hard it is to build a brand in today’s world,” Greg Portell, senior partner in the global consumer practice at consulting firm Kearney, told Retail Dive. “It’s very difficult. The name itself tends to be the valuable asset in an IP portfolio.”
That makes it surprising that Don Pablo’s, once the second-largest full-service Mexican chain in the United States behind Chi-Chi’s, remains a relic of the past with no locations open.
“In its heyday, it served 20 states with more than 100 locations, making it the closest competitor to Chi-Chi’s. The first Don Pablo’s location appeared in Texas in the mid-1980s, and due to its success, it began to grow from there – so much so that seven years after its conception, it was already gaining traction with 10 Newsbreak stores.
Don Pablo’s has been renowned for using high quality ingredients in their tacos, burritos, fajitas, salads and more.
This was a stark contrast to Taco Bell, the brand most Americans associated with Mexican food at the time.
It was also an affordable option, at least in part because the meat portions at Mexican restaurants are topped up with 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. That number had nearly doubled by 1998, when those looking for tasty Tex-Mex could choose from 96 Don Pablo’s restaurants,” according to The Takeout.
That number rose to 120 at the top of the chain.
Don Pablo formally filed for Chapter 11 bankruptcy protection in 2016, according to PacerMonitor.
“The reason for the filing is reportedly due to increased competition from Mexican ‘fast casual’ brands and declining interest in casual dining,” WRTV Indianapolis reported at the time.
Part of that competition came from the growing success of Chipotle.
“Fast-casual restaurants have spent the past decade convincing diners that they can offer fresher food and a better experience than fast food, minus the wait or high price of a large meal, according to a Barron’s industry analysis of fast-casual competition and consumer behavior.
of Chipotle annual report 2016 the company says 2,250 restaurants in operation starting from the date of December 31, 2016including Chipotle, International and other related units, according to the chain’s SEC filings.
Chipotle’s management pushed up prices relative to traditional restaurants as an advantage.
“Management pointed out that core offerings like the Chicken Bowl are priced 20-30% lower than comparable fast-food meals, making its value proposition compelling despite consumer pullbacks,” Zacks said on Nasdaq.com.
The competition wasn’t just Chipotle, as The Takeout also reports that 1 in 10 US restaurants serve some variation of Mexican cuisine.
Unlike many other brands, however, Don Pablo’s did not survive Chapter 11 bankruptcy, and unlike Chi-Chi’s, which is trying to make a comeback, as TheStreet’s Fernanda Tronco reported, no efforts have 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 has definitely made me opt for takeout instead of sitting in a traditional Mexican restaurant.
As I’ve gotten older, the pendulum has swung back a bit, as I’m now much more likely to want to sit down and be served a meal.
Don Pablo’s did not survive Chapter 11 bankruptcy.Shutterstock” loading=”lazy” height=”540″ width=”960″ class=”yf-lglytj loader”/>
Don Pablo’s did not survive Chapter 11 bankruptcy.Shutterstock
To be fair, Don Pablo’s owner, Avado Brands, survived a Chapter 11 bankruptcy filing in 2004 and a subsequent one in 2007.
“While Avado Brands was able to emerge from bankruptcy the following year, with 96 Don Pablo’s restaurants still in operation, it was a brief reprieve. The company filed a second time in 2007, at which point it was between $1 million and $100 million in debt,” according to The Takeout.
More restaurants
It was this bankruptcy filing in 2017, under a new owner, Food Management Partners, that finally put the chain down (seemingly) for good.
“After acquiring the company in 2014, it gradually disappeared from Don Pablo’s restaurant lineup. In the following years, restaurants began to disappear, and in 2017, the once-popular chain filed for bankruptcy protection again,” according to the site.
Don Pablo’s final location closed in 2019.
Red Lobster continued after Chapter 11: The seafood chain filed for bankruptcy in 2024, closed underperforming restaurants, reorganized and continues to operate in 2025 under new ownership and strategic plans, Yahoo reported.
Hooters of America has filed for Chapter 11 but remains active: In March 2025, Hooters filed for Chapter 11 bankruptcy with a plan to sell about 100 company-owned restaurants to groups of experienced franchisees, including the founders; the remaining locations continue to operate, according to Restaurant Dive.
The plant survived bankruptcy by purchase: Upscale vegan chain Planta filed for Chapter 11, and in 2025, its key locations were acquired by Anchorage Capital Group, allowing it to continue in big cities, shared Houlihan Lokey.
Bar Louie continued through restructuring and sale: The bar-restaurant chain filed for Chapter 11 and, through financing and a debtor-in-possession sale to new owners, kept dozens of locations and operations, Houlihan Lokey reported.
On the Border Mexican Grill & Cantina remains open during Chapter 11: After filing for bankruptcy in early 2025, the brand was acquired by Pappas Restaurant Group, and some locations survived, according to Restaurant Dive.
Tijuana Flats filed for Chapter 11 bankruptcy protection in April 2024closed about 11 restaurants as part of restructuring, was acquired by Flatheads LLC and successfully emerged from bankruptcy in January 2025 with plans to refresh its menu, improve operations and expand again, according to FastCasual.com.
1985, founded in Lubbock, Texas: Don Pablo’s has opened its first Tex-Mex restaurant in Lubbock, Texas, launching a casual dining brand that will grow nationally.
1990s, rapid expansion to 120 locations: At its peak in the late 1990s, the chain had approx 120 restaurants in the USmaking it one of the largest Mexican casual dining brands.
2004 and 2007, early bankruptcies and contraction: The original ownership filed for bankruptcy and reduced the number of restaurants. The brand changed hands and gradually shrank over the next few years as competition increased.
2014, acquired by Food Management Partners (FMP): After years of closings, the remaining 34-unit chain has been acquired by Food Management Partners, a restaurant operator looking to rebrand.
2016, major bankruptcy filing and closings: In 2016, Don Pablo’s parent companies filed for bankruptcy protection, closing numerous locations.
June 24, 2019 Last US Location Closes: Don Pablo’s last restaurant in Deptford Township, New Jerseyabruptly closed its doors, ending the brand’s operational history. Source: Mashed
Related: Upscale steakhouse chain is shutting down 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 favorite source by clicking here.
