Abuelo’s, a 26-year-old Mexican chain, has filed for bankruptcy.
The chain, based in Lubbock, Texas, operates 16 restaurants in seven states (Arizona, Arkansas, Florida, Kansas, Oklahoma, South Carolina, and Texas).
Abuelo’s blamed the bankruptcy on a big drop in sales, rising food and labor costs, continued staffing challenges, and changes in consumer preferences. The chain began seeing headwinds in 2023, stemming from inflation and a drop in guests’ willingness to spend money on dining out. Traffic dropped 5.9 percent year-over-year. At the same time, the brand faced labor shortages and increased wage pressure.
These issues persisted into 2024. Additionally, some locations experienced weather events throughout the busy months of May and June, leading to 63 days’ worth of store closures. This resulted in a loss of $550,000 in revenue.
Abuelo’s combated the drop in sales and profitability with its off-premises channels, which rose 7.7 percent in 2024, and by reducing corporate overhead and shuttering low-performing restaurants.
The restaurant owes $8 million to First Bank & Trust. It also has upwards of 300 unsecured creditors holding claims totaling $5 million.
“We can confirm that the company has filed for Chapter 11 bankruptcy,” Abuelo’s said in an emailed statement. “This decision is a part of a strategic reconstructing process to strengthen our long-term financial position. We will continue normal operations and remain committed to maintaining stability for our employees, vendors and customers. Through this time, our loyal customers can join us and expect the same quality and hospitality as we’ve always provided.”
The brand once had 40 locations, stretching as far as Indiana and Virginia. Abuelo’s was growing at a rate of two to three stores per year back in 2017, according to an FSR magazine article.
Abuelo’s was founded in 1989 in Amarillo, Texas, by James Young, Chuck Anderson, and Dirk Rambo. The chain prides itself on serving authentic, made-from-scratch Mexican food.
