OTB Hospitality, the company that operates On the Border Mexican Grill, filed for Chapter 7 bankruptcy liquidation last week, according to court records from the U.S. Bankruptcy Court for the Southern District of Texas.
The filing follows the closure of scores of corporate-operated restaurants over the last year, which left the chain with just five open locations — all franchised — as of mid-June. Those five locations were still listed as open on the chain’s website as of Tuesday morning, and had functioning online-order portals.
According to the filing, OTB Hospitality possessed between $500,000 and $1 million in assets, and between $1 million and $10 million in liabilities.
This is the second time in a year and a half that On the Border has filed for bankruptcy, though its initial Chapter 11 filing in March 2025 resulted in the purchase of the chain by Pappas Restaurants, a multi-concept restaurant operator.
At the time of the Chapter 11 filing, On the Border attributed its troubles to consumer price sensitivity arising from menu price inflation, rising labor costs and costly leases, according to a declaration from the company. In 2024, the brand spent over $11.8 million on leases for underperforming locations, and later closed upwards of 40 such locations before its first bankruptcy.
When Pappas Restaurants took control of On the Border, the operator planned to improve operations, modernize the store base and bring over a hospitality model from Pappas other concepts. But On the Border’s decline continued, with the chain closing more stores before its most recent filing.
Casual dining chains have performed unevenly in the last couple of years. Some, like Chili’s, have been able to capitalize on the price sensitivity cited by On the Border by positioning themselves as experiential choice offering a more holistic value than QSR combo meals. Others, like On the Border, Red Lobster and TGI Fridays, struggled to adapt to the post-COVID and inflationary macro pressures, resulting in bankruptcies.
