By Lori Weisberg | San Diego Union-Tribune
Rubio’s Coastal Grill, which began in San Diego more than 40 years ago and once boasted close to 200 restaurants, announced Wednesday it is filing for bankruptcy protection with the goal of selling the business.
In a news release issued by the company’s public relations firm, Rubio’s said its existing 86 restaurants will remain operating while the Chapter 11 bankruptcy process proceeds.
Also see: Rubio’s closes 48 restaurants in California, citing ‘business climate’
This latest filing marks the second one in a span of less than four years, and comes just days after Rubio’s abruptly closed 48 of its restaurants in Southern California.
The company, which hired the Los Angeles-based crisis management public relations firm Sitrick and Co., declined to provide specifics on which restaurants closed. But former employees provided a list of the most recent Southern California closures on Reddit:
Adelanto, Anaheim Hills, Brea, Cerritos, Eastvale, Fountain Valley, Fullerton, Huntington Beach (Beach Boulevard), La Habra, Lake Forest, Lakewood, Long Beach, Marina Del Rey, Ontario, Orange (N. Tustin St.), Oxnard, Pasadena, Placentia, Rancho Santa Margarita, Santa Ana (at the 55 Freeway along 17th Street), Santa Clarita, Seal Beach, Tustin, Ventura and Whittier. Another 13 closed in San Diego County.
All of Rubio’s restaurants in Northern California closed as well.
“Despite the company’s best efforts to right-size the company, the continued challenging economic conditions have negatively impacted its ability to meet the demands of its debt burden,” Nicholas Rubin, the company’s chief restructuring officer, said in a statement provided to the San Diego Union-Tribune. “The company believes the best path forward for Rubio’s is through a court-supervised sale process that will position the brand for long-term success to grow and flourish.”
Rubin said its existing lender has agreed to provide debtor financing and has enough liquidity to continue operating the restaurants during the sale process.
The Chapter 11 petition, filed on Wednesday in Delaware, states that Rubio’s Restaurants has assets of between $10 million and $15 million, while liabilities are estimated to be between $100 million and $500 million. The number of creditors may be as high as 25,000, the company stated in the filing.
Among the 30 largest creditors with no secured claims is its lender, TREW Capital Management with an unsecured claim of nearly $28 million. Also on the list are the California Department of Tax and Fee Administration, San Diego Gas & Electric, Southern California Edison and the San Diego County Treasurer-Tax Collector, with more than $74,000 owed.
As it did several days ago, Rubio’s blamed its declining performance on what it said is the difficulty in doing business in California, where a recent wage hike to $20 an hour recently went into effect for fast food workers at larger chains.
A number of fast food chains have already raised prices in response to the wage increase, while others are taking a wait-and-see approach.
Rubio’s said it plans to enter into what is known as a stalking horse purchase agreement to sell the business to an entity that would be formed and controlled by its existing lender. It expects the sale to be completed within 75 days. It will be seeking court approval to continue operations that it said will allow employees to continue receiving their pay and benefits.
Ralph Rubio, the co-founder of the Mexican fast casual chain known as the home of the original fish taco, will continue with the company, the news release said, and will “provide his usual inspiration and energy going forward,” the release said.
The company celebrated its 40th anniversary last year, selling its original fish taco for just 99 cents on Jan. 25.
Rubio has declined to comment on the chain’s financial troubles, which have been building for years, and has not responded to an interview request from the Union-Tribune.
Even with 86 remaining Rubio’s outlets in California, Arizona and Nevada, the chain is a fraction of what it once was. A little less than four years ago, the company had as many as 170 locations in the U.S.
The current owner of Rubio’s, private-equity firm Mill Road Capital, acquired the company in 2010 for $91 million, a sale that transformed what had been a publicly traded company into a privately owned business. Five years later, the chain changed its identity from Rubio’s Fresh Mexican Grill to Rubio’s Coastal Grill.