Dive Brief:
- Del Taco franchisee Matadoor Restaurant Group filed for Chapter 11 bankruptcy protections on Tuesday, according to court filings with the U.S. Bankruptcy Court for the District of South Carolina.
- The company, which is wholly owned by Red Door Brands, operates 22 Del Taco units in Georgia and Alabama. The company lists between 100 and 199 creditors and has estimated liabilities between $1 million and $10 million.
- Matadoor said in court filings that it started to struggle financially in the last half of 2024 due to “company growth, an unexpected decline in sales, and rising operational costs.”
Dive Insight:
Matadoor is the latest Del Taco franchisee to take a major financial hit. Newport Ventures, which owned 18 locations in Colorado, closed all of its restaurants in February after declaring bankruptcy last October. Del Taco took ownership of these units and began reopening 17 of the locations in late June.
Del Taco owner Jack in the Box said earlier this year that it is considering selling the chain that it bought in 2021 for $575 million. Del Taco has struggled in recent quarters to grow same-store sales, posting a decline of 3.6% in fiscal Q2 2025, according to an earnings release. Franchised same-store sales were down 4.2%, while company-owned units were down by 1.7% during that quarter.
Matadoor’s financial situation has not improved in the past few months, either. It took out various merchant cash advance loans to bridge its financial gaps while it analyzed its cash flow problems.
The company closed two underperforming units and took out additional loans. These loans put Matadoor into further debt “due to the excessive fees, excessive effective interest rate, and aggressive payback schedules,” according to court documents. The company ended up taking out 10 of these loans from nine different creditors, with loans totaling about $2.7 million.
“Despite its efforts to reduce expenses, the Debtor’s revenue has not been able to keep up with the MCA obligations,” the court document said.
This has led to each of these creditors claiming an interest in Matadoor’s future sales and/or accounts receivable. A handful of its creditors filed UCC-1 financing statements, which are documents filed with the state that basically gives creditors priority over assets when a company becomes insolvent, according to the Legal Information Institute.
A lien hold was placed on some of the debtors' accounts recently, which has been detrimental to Matadoor’s ability to operate. The company said it had to file Chapter 11 to stop collection efforts and allow for Matadoor to reorganize.
Matadoor’s parent company also owns Red Door Pizza, Red Door Sandwich and Maverick Restaurant Group, which operate various QSR brands, including Little Caesars, McAlister’s Deli and Arby’s. Each of these sister companies have filed separate Chapter 11 bankruptcy petitions and cited Matadoor’s financial difficulties as reasons for the filings.
