Rubio’s Coastal Grill, a restaurant rooted in San Diego, California, recently announced its filing for Chapter 11 bankruptcy protection due to rising costs in the state. The company had earlier shut down 48 underperforming locations, including 13 in the San Diego area, while 86 outlets continue to operate as usual.
Established in 1983, Rubio’s Coastal Grill has branches in California, Arizona, and Nevada. Its founder, Ralph Rubio from Carlsbad in northern San Diego County, was inspired to start the first Rubio’s restaurant after trying a fish taco during a trip to Mexico with friends. This culinary experience sparked his idea to bring this type of cuisine to San Diego.
In a previous statement regarding the closures, Rubio’s company expressed, “The decision to close stores has never been an easy one.” They stated that while painful, these closures were necessary steps in their long-term strategic plan to ensure success in the coming years, citing the rising operational costs in California as the reason.
The company is in the process of signing a purchase agreement with entities controlled by its existing lenders to sell its business, with the sale expected to be completed within 75 days. The chain attributed the store closures to a decrease in customers due to remote working in recent years, along with increased costs for food, water, and electricity, as well as the significant rise in California’s minimum wage.
Nicholas Rubin, Chief Restructuring Officer of Rubio’s, acknowledged the restaurant chain’s legendary status and loyal customer base in its communities. He emphasized that despite their efforts to adjust the company’s scale, ongoing challenging economic conditions have negatively impacted their ability to meet debt obligations. The company believes that the best path forward for Rubio’s is through a bankruptcy sale supervised by the court to ensure the sustainability of the brand and future growth.
In mid-May, Red Lobster, a chain with nearly 600 locations nationwide, also filed for Chapter 11 bankruptcy protection. One of its three San Diego stores in the Mira Mesa area abruptly closed. Red Lobster attributed the bankruptcy to rising labor and raw material costs, with analysts pointing to the loss incurred by their aggressive discount promotions as a significant factor.