Popular Mexican chain joins wave of Chapter 11 bankruptcies | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

While inflation, rising labor costs, and a struggling economy have hit many restaurants hard, Mexican chains have seemingly faced even deeper problems.

“It’s really tough because prices have just been rising, and a lot of consumers don’t feel as though their salaries have kept pace,” Justine Rapp Farrell, a professor of marketing at the University of San Diego’s Knauss School of Business, told Scripps News.

Mexican restaurant owners have specifically commented on price hikes impacting their menu items.

“It’s literally everything,” La Vaca Birria’s owner Ricardo Lopez told People. “Beans are up, rice is up.”

Chipotle, which expects 2026 sales to be flat, sees costs rising higher than it can raise prices.

“We will continue to take a disciplined and measured approach to pricing, but do not expect it to fully offset inflation in the near term as we remain committed to delivering exceptional value for our guests,” CEO Scott Boatwright said during the chain’s fourth-quarter earnings call.

These factors have led to a number of major places in the space, including Tijuana Flats, Abuelo’s and On the Border, filing for Chapter 11 bankruptcy protection. Now, another chain, Salt and Lime, has also filed its own Chapter 11 bankruptcy petition.

Salt and Lime files for Chapter 11 bankruptcy

Salt and Lime 44 LLC, an Arizona-based chain, has filed for Chapter 11 bankruptcy protection, according to PacerMonitor documents. That chain operates three restaurants in Arizona, and the filing does not impact independent restaurants using similar names operating in other states.

“As of February 2026, the company operates the Salt and Lime Modern Mexican Grill located on North 44th Street in Phoenix. The brand maintains a total of three locations in the region, including sites on Shea Boulevard and Cave Creek, though the bankruptcy filing specifically pertains to the 44th Street entity. The company was recently involved in civil litigation in Maricopa County Superior Court, with a hearing held as recently as February 23, 2026,” according to RK Consulting, a firm that covers Chapter 11 bankruptcies.

The Salt and Lime brand was established in 2014 with its flagship Scottsdale location. The 44th Street location, managed by Salt and Lime 44 LLC, opened in early 2024 following a comprehensive remodel of the space, according to local news reports.

Currently, the chain remain open during its Chapter 11 bankruptcy process.

Salt and Lime Chapter 11 facts:

Salt and Lime 44 LLC filed for Chapter 11 bankruptcy on February 26, 2026, in the U.S. Bankruptcy Court for the District of Arizona, according to PacerMonitor.
The case is assigned Case No. 2:26‑bk‑01762 and was voluntarily filed under Chapter 11, allowing the restaurant to seek restructuring while continuing operations, reported Bankruptcy Observer.
Assets and liabilities are both reported in the range of $100,001–$1,000,000, with roughly 50–99 creditors listed in the initial filing documentation, according to PacerMonitor filing.
The initial docket entries included the Chapter 11 voluntary petition, a deficiency notice for missing documents, and the scheduling of a meeting of creditors for March 31, 2026, according to PacerMonitor.

Mexican restaurants have been hit hard by rising costs and falling demand.

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Restaurants are struggling broadly

Mexican chains are not alone in struggling, and the problems are not new.

“In this situation, a challenging economic environment, post-pandemic recovery issues, rising labor costs, changing consumer habits, and inflation have caused more restaurants to struggle,” Jonathan Carson, co-CEO of bankruptcy services and technology firm Stretto, explained to Fox Business.

The National Restaurant Association (NRA) shared some stark data on why so many restaurants are struggling.

Food and labor costs were the two most significant line items, each accounting for approximately 33 cents of every dollar in sales.
Other expenses – such as utilities, occupancy, supplies, general/administrative, repairs/maintenance, and credit card processing fees – combined to represent about 29% of sales.
That left a pre-tax profit margin of roughly 5% for a typical restaurant, which means significant cost increases were not sustainable.

“Based on government data and surveys of restaurant operators, the National Restaurant Association estimates that input costs posted double-digit percentage increases across all major categories since 2019 – led by 35% gains in both food costs and labor costs,” the trade association shared.

In order to survive, restaurants must adapt.

“For restaurants still operating, the lesson isn’t panic, it’s adaptation. Now’s the time to think about how to engage and make experiences that keep people coming back,” retail expert and RTMNexus CEO Dominick Miserandino told TheStreet’s Maurie Backman.

These Mexican chains have filed Chapter 11 bankruptcy

Between 2024 and 2026, at least four prominent Mexican restaurant chains, Tijuana Flats, Abuelo’s, On The Border, and El Burro Loco, filed for Chapter 11 bankruptcy, illustrating the broader financial pressures on the segment, including rising labor and food costs, declining customer traffic, and economic uncertainty

Tijuana Flats Restaurants, LLC: Filed Chapter 11 in April 2024; closed 11 restaurants during restructuring and was acquired by a new ownership group, according to PacerMonitor.
Abuelo’s International, L.P.: Filed Chapter 11 on September 2, 2025 in U.S. Bankruptcy Court for the Northern District of Texas; listed assets and liabilities between $10 million and $50 million, reported PacerMonitor.🔗 PacerMonitor Case: Abuelo’s International, L.P. Bankruptcy (Chapter 11)
On The Border Mexican Grill & Cantina: Filed for Chapter 11 in March 2025 amid macroeconomic and traffic declines; cited assets and liabilities of $10 million‑$50 million in filings. (Was acquired by Pappas Group), reported Nation’s Restaurant News.
El Burro Loco Food Corp – Filed Chapter 11 in October 2025 in the U.S. Bankruptcy Court for the Middle District of Florida, according to PacerMonitor filings.