Rubio’s Coastal Grill Files for Chapter 11 After Store Closures

San Diego-based fast casual chain Rubio’s Coastal Grill has filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The company is taking this action, which followed the closure of 48 locations across California earlier this week, to facilitate the sale of the business. Rubio’s has 86 locations in California, Arizona and Nevada that will continue normal operations.

Rubio’s cited diminishing in-store traffic attributable to work-from-home practices remaining in place, along with rising food and utility costs that, combined with significant increases to the minimum wage in California, put pressure on a number of its locations.

“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,” said Nicholas Rubin, chief restructuring officer of Rubio’s Coastal Grill. “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.”

The company will enter into a stalking horse purchase agreement to sell its business as a going concern to an entity formed and controlled by its existing lender. Hilco Corporate Finance is being retained to conduct a sale process under the bid.