Taco Bueno Files Chapter 11 Bankruptcy
Last Tuesday Dallas-based Taco Bueno Restaurants LP announced that it filed a voluntary petition for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the Northern District of Texas. The franchising firm plans to reorganize and emerge from insolvency under a prepackaged plan where multi-concept franchisee Sun Holdings will take over.
Dallas-based Sun Holdings has acquired all of Taco Bueno’s outstanding bank debt and will provide up to $10 million in debtor-in-possession financing to support Taco Bueno’s operations as the Tex-Mex franchisor reorganizes. Sun Holdings will become the owner of Taco Bueno through a debt-for-equity swap.
"We are pleased to have reached this agreement with Sun Holdings on the terms of a financial restructuring that will strengthen our balance sheet and position our company for continued success. We also look forward to welcoming Sun Holdings as the new owner of Taco Bueno," said Omar Janjua, chief executive officer of Taco Bueno, who joined the company in March from The Krystal Company.
"Sun Holdings is a large, multi-concept franchisee based in Dallas with a deep understanding of both the quick service space and the region where we operate, which will enable us to be an even more attractive employer, business partner and dining staple in the communities we serve," continued Janjua. "During this court-supervised process, we will continue to focus on initiatives to grow the Taco Bueno brand, while remaining true to our roots, delivering great-tasting meals to our customers in an inviting and comfortable environment. We thank our dedicated employees for continuing to provide an authentic, better-tasting Tex-Mex experience and unmatched customer service to guests as we've done for more than 50 years.”
Taco Bueno’s restaurant numbers have been shrinking. In March, Taco Bueno reported it had 160 company-owned and 22 franchised restaurants from Texas to Missouri. In September the chain was reduced to 172. In its latest press release of November 6, the company reports now only having 169 restaurants affiliated with its brand (see chart).
Taco Bueno has also filed a number of motions with the bankruptcy court, including authorization to continue to pay employee wages, provide work benefits, and to pay vendors for all goods and services. It expects to receive court approval.
”We know quick service and the customer base well, and we see considerable opportunities to invest across the Taco Bueno footprint to enhance the customer experience and drive long-term growth for the brand,” said Guillermo Perales, chief executive officer and founder of Sun Holdings Inc.. Franchisee Sun Holdings has more than 800 franchised restaurants under Burger King, Popeyes, Arby’s, Golden Corral and Krispy Kreme brands in 8 states. It is one of the largest franchisees in America.
Taco Bueno photo by JD Hancock