Pappas Restaurants to Acquire Bankrupt On The Border, Signaling Potential Revival for Tex-Mex Chain

On The Border Mexican Grill & Cantina, the Tex-Mex restaurant chain that recently filed for Chapter 11 bankruptcy, may be poised for a comeback under new ownership. Houston-based Pappas Restaurants, a well-established name in the Texas dining scene, has emerged as the winning bidder in an auction to acquire the struggling chain. The acquisition, subject to court approval in the coming weeks, promises to inject new life into On The Border and leverage Pappas Restaurants’ extensive experience in the hospitality industry.

The announcement has sparked optimism among loyal On The Border customers who were concerned about the future of their favorite Tex-Mex destination. Pappas Restaurants, known for its popular concepts like Pappadeaux Seafood Kitchen, Pappasitos Cantina, Pappas Bar-B-Q, and Pappas Bros. Steakhouse, brings a wealth of operational expertise and financial stability to the table. The acquisition signals a potential turnaround for On The Border, which has faced significant challenges in recent years.

"We’re excited to welcome On The Border to the Pappas family," said Mike Rizzo, CEO of Pappas Restaurants, in a news release. "On The Border is a brand with deep heritage and loyal guests, and we see tremendous opportunity to invest in its future. Our shared Texas roots and passion for hospitality make this a natural fit."

The acquisition marks a significant expansion for Pappas Restaurants, further solidifying its position as a dominant player in the Texas restaurant market. By adding On The Border to its portfolio, the company gains access to a broader customer base and strengthens its presence in the casual dining segment. The move also allows Pappas Restaurants to diversify its offerings and capitalize on the enduring popularity of Tex-Mex cuisine.

On The Border’s journey to bankruptcy was attributed to a confluence of factors, including challenging economic conditions, labor shortages, underperforming restaurants, and creditor enforcement actions. The company’s financial struggles reflect the broader challenges faced by the casual dining industry in recent years, as restaurants grapple with rising costs, changing consumer preferences, and increased competition.

According to Jonathan Tibus, OTB Holdings Chief Restructuring Officer, On The Border had been "weighed down in recent years by macroeconomic factors that have negatively impacted the Company." In court records, Tibus noted that "casual dining restaurants are acutely impacted by consumer sensitivities to eating out versus staying in." This highlights the vulnerability of the casual dining sector to economic fluctuations and shifts in consumer behavior.

In an effort to streamline operations and improve profitability, On The Border made the difficult decision to close 40 underperforming stores in late February. This move was intended to reduce costs and focus resources on the company’s most successful locations. However, it was not enough to overcome the underlying financial challenges that ultimately led to the bankruptcy filing.

Despite its recent struggles, On The Border retains a strong brand identity and a loyal customer base. The restaurant chain is known for its lively atmosphere, bold flavors, and extensive menu of Tex-Mex favorites. With its vibrant decor, festive music, and generous portions, On The Border offers a unique dining experience that has resonated with customers for many years.

Pappas Restaurants recognizes the value of the On The Border brand and is committed to preserving its distinctive character. The company plans to invest in revitalizing the restaurants, enhancing the menu, and improving the overall customer experience. By leveraging its expertise in restaurant management and its deep understanding of the Texas market, Pappas Restaurants aims to restore On The Border to its former glory.

"On The Border has always stood out for its energy and bold flavors—it’s a brand we’ve known and respected for years," said Chris Pappas, co-owner of Pappas Restaurants. "This gives us the chance to bring our passion for Tex-Mex to more guests, and we’re excited to build on what makes both brands special."

The acquisition of On The Border by Pappas Restaurants represents a new chapter for the Tex-Mex chain. With its strong financial backing, operational expertise, and commitment to quality, Pappas Restaurants is well-positioned to turn On The Border around and restore its position as a leading player in the casual dining industry. The deal offers hope for employees, customers, and stakeholders who have a vested interest in the success of On The Border.

The future of On The Border under Pappas Restaurants’ ownership remains to be seen. However, the acquisition signals a renewed commitment to the brand and a willingness to invest in its long-term success. By combining the strengths of both companies, Pappas Restaurants aims to create a winning formula that will appeal to a wide range of customers and solidify its position as a leader in the Texas restaurant market.

As the acquisition process moves forward, industry observers will be closely watching to see how Pappas Restaurants integrates On The Border into its existing portfolio. The company’s track record of success in the restaurant industry suggests that it has the experience and resources necessary to revitalize On The Border and create a thriving Tex-Mex dining destination for years to come.

The acquisition of On The Border by Pappas Restaurants is more than just a business transaction; it is a story of hope and opportunity. It is a story of a struggling brand getting a second chance and a story of a successful company expanding its reach and influence. It is a story that reflects the resilience of the restaurant industry and the enduring appeal of Tex-Mex cuisine.

With its shared Texas roots and passion for hospitality, Pappas Restaurants is the ideal partner to guide On The Border into the future. The acquisition promises to bring new energy and excitement to the Tex-Mex chain, creating a dining experience that is both familiar and fresh. As On The Border embarks on this new chapter, it is poised to reclaim its place as a beloved destination for Tex-Mex lovers across the country.