Don Pablo's, a chain of Tex-Mex restaurants, has filed for Chapter 11 bankruptcy protection in San Antonio after being hit hard by more competition in the Mexican casual dining segment, according to court documents.
At one point, Don Pablo's had 120 locations throughout the United States after being founded in 1985, making it the second largest full-service Mexican restaurant chain in the U.S. during the 1990s, according to the filing U.S. Bankruptcy Court. Now, its website lists it as having restaurants in nine states, mostly in the East and Midwest.
John Mitchell, attorney for Rita Restaurant Group, which operates Don Pablo's, said in court documents filed Tuesday that efforts to improve financial performance have been "adversely impacted by the overall weakness in the casual dining environment."
"The casual dining industry is highly competitive and faces increased competition from fast-casual dining options," Mitchell said in the documents. "Despite the relatively steady economy in most of the United States, the casual dining environment remains depressed."
Additionally, Mitchell said Moe's Southwest Grill, Panchero's Mexican Grill, Qdoba and Chipotle Mexican Grill, among others, have added pressure to Mexican casual dining.
The "Mexican" meal is available in "new and substantially more locations," Mitchell said.
Court documents indicate Rita's Restaurant Group holds between $1 million and $10 million in estimated liabilities.
One way to cut costs, Mitchell said in the filing, was to close locations.
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