Tijuana Flats: Florida Tex-Mex Chain Emerges After Closing 40 Restaurants

Tijuana Flats Restaurants, LLC and TJF Franchise Group, LLC operate the Tijuana Flats fast-casual Tex-Mex brand. The debtors filed chapter 11 on April 19, 2024 in the U.S. Bankruptcy Court for the Middle District of Florida (Jacksonville Division), alongside an ownership transition to Flatheads, LLC. The filing followed a rapid contraction in the store base and mounting pressure from inflation in food and labor costs, a dynamic covered in reporting on the chapter 11 filing and closures and local updates on location shutdowns.

Founded in 1995 in Winter Park, Florida, Tijuana Flats grew into a regional chain and partnered with AUA Private Equity Partners in 2015, a deal that highlighted 110 locations across multiple states. By the petition date, the company reported 65 company-owned restaurants and 26 franchised locations, with the franchise entity administering 23 active franchised units after three locations were surrendered in July 2024. Local reporting noted that the brand maintained franchised locations in multiple states, reinforcing that the footprint extended beyond Florida even as the company-owned base concentrated there.

Court filings attribute the distress to menu expansion that slowed service, compounded by inflation-driven cost pressure and declining traffic, a backdrop echoed in coverage of the leadership transition to turnaround CEO James Greco and the company's post-filing operational reset. Media coverage also pointed to a pre-filing decline in same-store sales and negative EBITDA, illustrating how operational complexity and cost inflation converged to strain liquidity.

The restructuring did not rely on a traditional DIP facility. Instead, the case operated on cash collateral with rent relief, vendor financing, and a hurricane-driven emergency loan layered onto the operating plan. The confirmed plan extended the secured debt maturity to 2028, funded modest general unsecured distributions, and closed the cases in March 2025 after the plan became effective.

Restructuring

Cash-collateral structure. Tijuana Flats ran the chapter 11 case on LSC2022 cash collateral rather than a new DIP. Adequate protection included a rollover lien on postpetition assets, a 507(b) superpriority claim, and a $200,000 professional carve-out. The cash-collateral framework mattered because the filing itself triggered a short-term sales dip and a wave of required utility deposits, so liquidity preservation drove early motions.

Liquidity snapshot at filing. The disclosure statement provides a useful picture of the opening balance sheet, which helps explain why the debtors focused on rent relief and vendor stabilization.

Cash management and entity consolidation. Prior to the filing, each store operated as a separate entity, which complicated cash management and reporting. The debtors merged most operating subsidiaries into Restaurants, LLC in mid-April 2024 and continued to use a consolidated cash management system postpetition. That simplification reduced administrative overhead and aligned cash collateral budgeting with the operating footprint that remained open.

The disclosure statement also outlines a broader corporate structure that includes TJF Franchise Group, TJF Advertising, and TJF Brand Marketing entities. The franchise group administers franchise agreements, while the advertising and brand marketing entities support marketing and brand programs. This structure matters because most operating obligations and lease exposure were concentrated in Restaurants, LLC, while the franchise entity continued to operate in parallel with separate economics.

Early stabilization steps. The debtors sought a one-month suspension of May 2024 rent to bridge a projected $85,000 cash shortfall, cover required utility deposits, and fund near-term operating needs such as Cinco de Mayo promotions and menu improvements. That motion laid out a fixed monthly rent burden of roughly $625,000 across more than 60 landlords, underscoring why rent relief was a first-day priority.

Liquidity and Working Capital Management

The postpetition operating plan was built around short-term cash preservation. In addition to rent relief, the debtors needed to post utility deposits and maintain vendor confidence after filing. Utility providers demanded new deposits and bonds totaling roughly $189,000, which narrowed the cash runway at the same time sales softened in the immediate wake of the filing. The decision to suspend May rent was framed as a liquidity bridge rather than a strategic re-trade of leases, with management stating that rent payments were expected to resume in June 2024.

The liquidity plan also relied on the company's cash management system and credit card receivables. A material portion of petition-date receivables reflected activity from recently closed restaurants, so the company's working capital in late April 2024 depended on converting those receivables into near-term cash while reopening and stabilizing the remaining stores. The restructuring also emphasized keeping food and labor spend within budgeted levels, which meant tighter weekly cash forecasts and deliberate prioritization of payroll, inventory, and utilities over non-essential discretionary spend.

Seasonality and promotion timing amplified the cash challenge. The May rent relief motion highlighted roughly $307,000 in planned Cinco de Mayo spending and menu-related improvements in the first week of May 2024, illustrating how peak-season promotions required upfront cash even as rent and utility obligations accumulated. The working-capital strategy effectively prioritized the ability to capitalize on high-volume periods while the company waited for postpetition sales to normalize.

Operating Footprint and Sales Profile

Tijuana Flats entered chapter 11 with a smaller but still substantial operating footprint. The company-owned business was concentrated in Florida, while the franchise group oversaw 23 franchised units (after three were surrendered in July 2024). Local coverage noted that the franchise network extended to multiple states, reinforcing the brand's regional reach even after the Florida store closures.

The LTM sales figure implies average company-store volume of roughly $1.31 million, but the spread in performance meant the closure and lease triage strategy targeted weaker locations first. That approach aligned with public reporting that the April 2024 closures followed a location-by-location review of financial performance, occupancy costs, and market conditions, and it explains why the debtors prioritized lease relief in the early weeks of the case.

The disclosure statement's store-level sales table suggests a long tail of lower-performing units alongside several higher-volume stores. Units at the low end of the range reported LTM sales below $1 million, while the best-performing restaurants approached $1.8 million. The performance dispersion helps explain why management pursued targeted closures rather than a uniform reduction, and why the plan narrative emphasized labor cost normalization and equipment upgrades at the remaining locations.

The 2015 partnership with AUA Private Equity Partners provides context for the later contraction. The press release announcing that partnership described a 110-unit system across multiple states, which signals a materially larger footprint than the one that entered chapter 11. The store base eventually exceeded 120 corporate restaurants and 26 franchised locations before the early-2024 downsizing. The chapter 11 case, in effect, preserved a smaller core of higher-performing stores while reworking the balance sheet and vendor obligations.

Store Closures and Lease Strategy

Closure wave. Court filings show that Tijuana Flats closed 24 operating subsidiaries between February and April 2024 and shuttered 11 additional restaurants during the week of April 15, 2024. The press coverage that accompanied the filing highlighted 11 immediate closures and a broader reduction of about 40 units in the months leading up to chapter 11, reflecting a rapid contraction intended to stem cash losses.

The cash collateral motion also referenced 29 corporate restaurants closed between January and April 2024, which lines up with the broader 35-store reduction once the additional April closures are included. The closure wave was paired with a corporate consolidation of store-level subsidiaries into Restaurants, LLC, which simplified lease administration and cash reporting as the debtors evaluated which locations to preserve.

Lease burden. The lease strategy became a defining feature of the case. The debtors were leasing real property from over 60 landlords, with aggregate monthly rent near $625,000. Prepetition rent due for January through April 2024 totaled roughly $940,000. Without rent relief, the company projected a short-term cash crunch and limited room to fund inventory, payroll, and utility deposits.

Rent suspension motions. The debtors sought permission to suspend May 2024 lease payments and later requested emergency relief for November 2024 rent after hurricane-driven disruptions. The November motion proposed repayment in six equal installments beginning January 15, 2025 for assumed leases, showing how rent deferrals were structured to align with cash-flow timing rather than treated as permanent abatements.

The lease posture also highlights the tradeoffs of a rapid closure strategy. In the May motion, the debtors described still covering losses at roughly 23 previously closed stores, underscoring that shuttering unprofitable restaurants did not immediately eliminate all occupancy-related obligations. This lag between store closures and lease resolution was one of the factors that pushed the debtors to pursue a combination of rent deferrals, lease assumption motions, and operational restructuring.

Labor, Cost Pressures, and Menu Complexity

The business challenges were not limited to rent. Court filings describe a menu expansion in 2021 and 2022 that increased complexity, added equipment and staffing needs, and slowed service, a combination that contributed to customer dissatisfaction and declining traffic. Those operational issues landed at the same time that food and labor inflation surged across the restaurant sector, squeezing margins and limiting the ability to raise prices. Media coverage of the turnaround noted a same-store sales decline and negative EBITDA in 2023, reinforcing the depth of the operating reset required after the filing.

Workforce obligations underscore the pressure. The debtors reported approximately 1,500 employees at the petition date and sought authority to pay $682,816.81 in prepetition wages. The wage motion divided employees into two pay cycles, with separate prepetition wage amounts for each group, and emphasized that retaining staff was essential to maintaining store-level operations during the restructuring. Employer benefit costs were material for a company of this size, including roughly $87,093 per month for medical coverage and additional monthly costs for dental, vision, life insurance, and disability plans. The debtors did not offer a 401(k) match, which helped control fixed costs but also reflected the broader effort to limit benefit expenses in a tight liquidity environment.

The labor footprint and cost structure explain why management emphasized tightening store-level labor controls and simplifying operations in the postpetition plan. In practice, that meant streamlining workflows, recalibrating staffing models, and focusing on speed of service, which was one of the operational pain points that management said contributed to declining customer satisfaction.

Capital Structure and Creditor Dynamics

The prepetition capital stack was anchored by a March 2022 credit agreement with Truist Bank, consisting of a $20 million term loan and a $1 million revolver. Truist required a $1.2 million interest reserve in May 2023 and quarterly principal reductions of $250,000, which eroded working capital even before sales softened. The loan was assigned to LSC2022, LLC in March 2024, and LSC2022 declared a default after missed quarterly payments in December 2023 and March 2024.

At the petition date, secured debt stood at approximately $18.804 million and total liabilities were about $26.906 million, including priority taxes, wages, trade debt, and lease obligations. The restructuring plan reduced the secured claim to $16.0 million and extended amortization to preserve near-term liquidity.

The combination of shrinking store cash flow and rising debt service obligations explains why the company's leadership prioritized a maturity extension and interest-only period in the plan. Without that runway, the remaining store base would have struggled to fund both operating improvements and debt repayment on the original schedule.

Vendor and Postpetition Financing

The company relied on supplier relationships to keep restaurants operating. The most significant vendor motion involved US Foods, which continued supplying food products on 30-day postpetition credit terms with administrative priority. The motion also resolved prepetition priority claims and set a payment schedule that balanced vendor protection with cash flow constraints.

The US Foods arrangement illustrates how the debtors balanced vendor confidence with liquidity constraints, particularly during the early postpetition period when utilities demanded new deposits and rent relief was still pending. It also illustrates the role of PACA claims in the food supply chain, which receive priority treatment and can influence payment sequencing for other creditors. By resolving PACA and 503(b)(9) exposure early, the debtors reduced the risk of supply interruptions and stabilized one of the core inputs to restaurant operations.

The motion provided a detailed waterfall for applying postpetition collections. US Foods was holding $895,914.28 in postpetition payments, which were applied first to PACA claims and then to the 503(b)(9) balance, and a $15,155.18 recall credit further reduced the priority claims. US Foods also agreed to release $282,569.69 in administrative fees to the debtors, which provided an incremental liquidity boost at a time when the company was funding deposits and rebuilding working capital.

Hurricane Impacts and Emergency Liquidity

In October 2024, hurricanes Helene and Milton introduced a second layer of liquidity pressure. Hurricane Milton made landfall on October 9, 2024 and forced most locations to close for 48 to 72 hours, with at least ten stores still shuttered after the initial event. Court filings estimate that Milton alone caused revenue losses exceeding $665,000 and perishables losses over $85,000. Helene, two weeks earlier, triggered an additional revenue shortfall above $250,000.

To bridge the gap, the debtors sought emergency authority to incur $1.2 million of postpetition financing from Flatheads at 4.5% interest. The loan was expected to be repaid from insurance proceeds or forgiven as new value in exchange for equity retention. This emergency financing directly tied operational disruptions to the financial structure of the plan, reinforcing why lease deferrals and liquidity management remained central to the case through late 2024.

The hurricane-related motions also illustrate how external shocks can complicate a middle-market restaurant restructuring. The debtors were already navigating rent relief and vendor payments, and the hurricanes added a sudden demand for cash to cover closures, spoiled inventory, and delayed sales. By the time of the November rent deferral motion, the debtors argued that deferring rent was the only viable way to stabilize cash flow while insurance proceeds were pending.

Leadership and Turnaround Initiatives

Leadership changes and operational initiatives were integral to the restructuring narrative. In June 2024, the company appointed turnaround specialist James Greco as CEO, a move that press coverage framed as a key step in stabilizing performance and rebuilding unit economics. Court filings cite operational initiatives that included store refreshes, updated preparation procedures, new technology to improve product quality, portion size increases, limited-time menu additions, and elimination of duplicative management layers at the store level. Management also focused on rectifying labor cost disparities among stores with similar sales volumes.

These initiatives were paired with marketing and brand refresh efforts. Bringing social media advertising in-house, tightening promotions around higher-margin menu items, and re-establishing speed-of-service standards were all framed as steps toward restoring customer satisfaction. The plan narrative suggested that early results were positive, and post-emergence press releases emphasized street tacos, store remodels, and renewed growth messaging, indicating a strategy focused on brand differentiation and unit-level profitability rather than rapid expansion.

Plan Terms and Outcome

The confirmed plan centered on resetting the secured debt and funding modest distributions to general unsecured creditors while preserving equity ownership. The core economic terms are summarized below.

Priority tax claims were scheduled to be paid in full over 60 months with statutory interest. General unsecured creditors received fixed pools: $200,000 for the Restaurants, LLC class and $5,000 for Tijuana Flats #176, LLC. Flatheads retained equity in exchange for a $205,000 cash contribution and conversion of a $1.2 million administrative claim into equity. The plan was confirmed on January 17, 2025, became effective on March 18, 2025, and the cases closed by final decree on March 27, 2025.

The plan also provided that cure amounts for assumed executory contracts and leases would generally be paid over a 12-month period starting in early 2025, easing near-term cash burdens. The deficiency portion of the secured lender's claim voted with the unsecured classes, which aligned creditor incentives around a consensual plan rather than a liquidation scenario.

Key Timeline

Frequently Asked Questions

What is Tijuana Flats? Tijuana Flats is a Florida-based fast-casual Tex-Mex chain founded in 1995 in Winter Park. It partnered with AUA Private Equity Partners in 2015 and later transitioned to Flatheads, LLC as the owner.

When did Tijuana Flats file for chapter 11? The debtors filed on April 19, 2024 in the U.S. Bankruptcy Court for the Middle District of Florida (Jacksonville Division).

How many restaurants did it operate at filing? Court filings show 65 company-owned restaurants and 23 franchised units at filing, with three additional franchised locations surrendered in July 2024.

Why did the company file for bankruptcy? Filings cite margin compression from food and labor inflation, menu changes that slowed service and raised costs, and a wave of store closures that preceded a default on the secured credit facility.

Was there DIP financing? No. The company operated on cash collateral provided by LSC2022 under court-approved budgets.

How large were lease obligations? The debtors reported aggregate monthly rent near $625,000 in May 2024 and prepetition rent arrears of roughly $940,000 for the first four months of 2024.

How did the hurricanes affect the case? Hurricanes Helene and Milton caused revenue losses exceeding $915,000 combined and forced widespread closures, prompting a $1.2 million emergency loan and a request to defer November 2024 rent.

How was the secured debt restructured? The secured claim was allowed at $16.0 million with interest at WSJ Prime, a one-year interest-only period starting July 1, 2025, and a balloon payment due June 30, 2028.

What did unsecured creditors receive? General unsecured creditors received fixed cash pools of $200,000 (Restaurants, LLC) and $5,000 (Tijuana Flats #176, LLC).

When did the plan become effective and the case close? The plan became effective on March 18, 2025 and the court closed the cases by final decree on March 27, 2025.

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