Dive Brief:
- Tijuana Flats filed for Chapter 11 bankruptcy protection Friday and closed 11 restaurants this week, the company said in a press release.
- Additionally, a new ownership group, Flatheads, bought the chain from TJF USA. Flatheads wants to preserve the organization’s “immense brand recognition, strong following and customer loyalty,” the press release said.
- The ownership changes may mark a setback for Tijuana Flats’ franchise development, which the chain attempted to accelerate last year with discounted franchise and royalty fees offered to operators who signed a development agreement by Dec. 1, 2023.
Dive Insight:
Last year, Tijuana Flats was on an aggressive growth push, planning to open 50 restaurants by 2025. The company wrote in an email to Restaurant Dive that it will continue to push forward with its franchise development, with three to four new franchised locations expected to open this year. The company will continue to look for new prospects and expand the brand. The chain currently has 65 corporate-owned locations and 26 franchised restaurants in the press release.
The plan to file for Chapter 11 and the sale was part of a strategic review that started in November. In the Chapter 11 filing, the company said it had 1 to 49 creditors, liabilities of $100,001 to $500,000 and assets up of $0 to $50,000.
The decision to close restaurants followed a unit-by-unit analysis of financial performance, occupancy costs and market conditions, per the press release. Franchisees will continue to receive support from Tijuana Flats and remaining locations will continue to operate as usual.
Despite the ownership change, current CEO Joe Christina, who joined the restaurant November 2022, will remain as CEO.
“The new ownership group said it was encouraged by the changes Christina has already put in place since his arrival and is looking forward to working with him and his leadership team to strengthen the brand,” the press release said.
On April 1, the chain debuted a new menu and new packaging for takeout and delivery that will “enhance the product and improve delivery times to its customers,” the press release said. Late last year, the chain also moved its test kitchen out of its corporate support center into a newly opened Florida restaurant to allow guests to be more a part of the menu innovation strategy, according to a press release emailed to Restaurant Dive.
Flatheads said it will work on improving quality controls, speed of service, food consistency, serving size and the in-store experience. The new owner also plans to renovate many Tijuana Flats locations to refresh the restaurants.
“Our new partners share a desire to continue the corporate culture and vision of Tijuana Flats, protecting and supporting our team members and franchisees so they can best serve their customers,” Christina said. “With this new ownership structure, and a robust strategic plan, we are well-positioned for an emergence in the fast casual space. I look forward to evolving and expanding our brand and supporting the communities we serve.”
