On The Border may soon have a new owner.
Pappas Restaurants submitted a $15.9 million stalking horse bid to acquire the chain out of bankruptcy. The funds consist of a credit bid, additional cash consideration, and a $750,000 good faith deposit.
A hearing to approve Pappas Restaurants as the stalking horse bidder is scheduled for Thursday afternoon. This means Pappas Restaurants would have the minimum bid to beat at a future auction.
The family-owned Pappas Restaurants, based in Houston, operates more than 80 locations across nine concepts: Pappadeaux Seafood Kitchen, Pappas Bros. Steakhouse, Pappasito’s Cantina, Pappas Delta Blues Smokehouse, Pappas Burger, Pappas Seafood House, Pappas Bar-B-Q, Little’s Oyster Bar, and Dot Coffee Shop.
The Pappas family’s involvement in the restaurant business dates back to 1897 when their grandfather, H.D. Pappas, emigrated from Greece to the U.S. and opened restaurants across Tennessee, Arkansas, and Texas.
On The Border declared bankruptcy in early March after dealing with declining revenues, labor shortages, rising costs, and “a dire lack of liquidity.” The chain shuttered 40 underperforming units before filing for bankruptcy. It now has around 80 restaurants in the U.S. and internationally (60 corporate-owned locations across 18 U.S. states, and 20 franchised units operating domestically and in South Korea).
To preserve cash and try to stay afloat, the company halted payments to vendors and landlords. This decision, while necessary to conserve liquidity, led to vendors cutting off services or refusing to deliver goods and landlords beginning eviction proceedings or repossessing leased premises.
The company has $19.6 million in prepetition debt, consisting of loans from CrossFirst Bank, a secured bridge loan from Pappas Restaurants and debt to US Foods.
The chain attempted a turnaround when it hired Tim Ward as CEO in 2021. On The Border embarked on a comprehensive rebranding initiative focused on upgrading menu offerings, revitalizing its service model, and emphasizing better Tex-Mex flavors—all aimed at reconnecting with elements that made the brand successful in the first place. The company also launched a new mobile app, online ordering system, and website, and expanded its value proposition with an improved loyalty program, free chips and salsa, meal combos, and innovation like birria tacos and seasonal margaritas.
Founded in 1982 as On The Border South Texas Café, the concept was purchased 12 years later by Brinker International, which opened the first franchise location shortly after. By 2001, the brand had 100 U.S. restaurants, and by 2007, it expanded to South Korea with several franchised outlets.
In 2010, Brinker sold On The Border and its 160 stores to Golden Gate Capital. Four years later, the private equity firm sold the chain to Argonne Capital Group.
On The Border is based in Irving, Texas, about four hours away from Houston.
