Popular Mexican Restaurant Chain Files for Bankruptcy
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Popular Mexican Restaurant Chain Files for Bankruptcy

October 12, 2011


As more and more Americans cut costs during the recession by opting for homemade meals, large restaurant chains are finding it more difficulty to feed their corporate owners.

This unfortunate reality was recently illustrated by the bankruptcy filing of Real Mex Restaurants, Inc., which owns popular chains like El Torito, Chevys Fresh Mex, and Acapulco Mexican Restaurant.

In all, the bankruptcy will affect more than 200 restaurants, most of which are concentrated in California and other western states.

According to a Reuters report, the company filed bankruptcy in Delaware, citing low demand triggered by the weak economy, rapidly rising food costs, and large debt obligations.

The group of restaurants represented by Real Mex Restaurants, Inc. is actually owned by an affiliate of Sun Partners, Inc., a large private investment firm.

In its bankruptcy paperwork, the Real Mex admitted to having only $1 million in cash at the time of its filing. This may seem like a healthy amount of cash, but it pales in comparison to the $49 million the company currently owes to its employees and food suppliers.

The recession has taken a painful toll on the restaurant industry, which has seen hundreds of once-thriving companies seek bankruptcy protection in recent years.

Restaurant companies that have recently sought the aid of bankruptcy lawyers include Perkins, Marie Callender’s, Sbarro, Fuddruckers, Friendly’s, and Charlie Brown’s Steakhouse.

Rising food costs and sinking demand for prepared foods has also hurt the finances of companies that make prepared foods for grocery stores.

Recently, Chef Solutions, a company that makes side dishes and deli salads for grocery stores such as Trader Joe’s and Wal-Mart, also filed bankruptcy in Delaware.

According to the Washington Post, the company was the second-largest prepared food maker in North America.

In its bankruptcy, Chef Solutions is reportedly seeking a quick sale to a venture capital group, which would absorb some of the company’s debts, while allowing it to continue its operations and maintain valuable supply lines.

As the economy continues to sputter, other restaurants may attempt to stave off bankruptcy by cutting staff, looking for cheaper supplies, and hoping that consumers regain their taste for eating away from home.

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