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Rubio's Restaurants, Inc. has announced that it has filed for Chapter 11 bankruptcy reorganization. On June 1, Rubio's Coastal Grill closed 48 underperforming locations in California --13 in the San Diego area, 24 in the Los Angeles area and 11 in northern California. Rubio’s other 86 locations in California, Arizona and Nevada will continue normal operations.
The press statement said Rubio's has been negatively affected over the past few years by diminishing in-store traffic attributable to work-from-home practices remaining in place, and by rising food and utility costs that, combined with significant increases to the minimum wage in California, put pressure on a number of its locations.
"Rubio's Coastal Grill is one of the legendary fast casual chains with a strong and loyal customer following in its communities," said Nicholas Rubin, chief restructuring officer of Rubio's Coastal Grill. "Despite the company's best efforts to right-size the company, the continued challenging economic conditions have negatively impacted its ability to meet the demands of its debt burden. The company believes the best path forward for Rubio's is through a court-supervised sale process that will position the brand for long-term success to grow and flourish."
Rubin said that the company has a commitment from its existing lender to provide debtor-in-possession (DIP) financing and has more than adequate liquidity to meet all its operating needs during the sale process. The company will be entering into a purchase agreement to sell its business as a going concern to an entity formed and controlled by its existing lender. The Company anticipates the sale transaction will be completed within 75 days.
The Company will be filing customary motions in the Chapter 11 cases, seeking court approval to continue operations during the sale process. These motions, subject to court approval, will ensure continued payment of employee wages and benefits, continued customer programs and other relief.
Co-founder Ralph Rubio, the iconic face and guiding force behind the company's popular menu items, will continue with the company.
"Making the decision to close a store is never an easy one," the company said in a statement. "While painful, the store closures are a necessary step in our strategic long-term plan to position Rubio's for success for years to come."
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