On The Border closed all of its company-owned restaurants after service on Friday, leaving the Mexican casual-dining chain with only franchised locations in the U.S. and South Korea. OTB Hospitality said the shutdown followed a thorough evaluation of the business.
The move lands at a moment when the brand had already been shrinking fast. On Friday, the chain’s website listed 33 units before the closures, and the shutdown appeared to wipe out 27 restaurants at once. The company said five franchised U.S. locations — in South Dakota, Florida, Nevada and California — will stay open, along with at least one franchised location in South Korea.
That abrupt turn matters because On The Border had only just changed hands. Last March, Houston-based Pappas Restaurants bought the chain when it still had 80 restaurants, and it said then that it planned to modernize the restaurants and update the menu and operations. Instead, the company-owned side of the business is now gone, and OTB Hospitality is saying only that it is evaluating the future of the brand and exploring a range of strategic options.
The gap between that earlier promise and Friday’s shutdown is the story. A brand that was once the fifth-largest Mexican casual-dining chain in the country has been under pressure for years, with sales falling nearly 33% last year and the unit count slashed by 42%. Technomic said On The Border was down to 57 restaurants at the end of last year, after the chain had already closed 77 struggling locations leading up to the filing.
On The Border was founded in Dallas in 1982 and reached 166 locations in 2007 before a long run of ownership changes, including sales to Brinker International in 1994, Golden Gate Capital in 2010 and Argonne Capital Group in 2014. Pappas operates about 90 restaurants across other brands, including Pappasito’s Cantina, Pappadeaux Seafood Kitchen and Pappas Bar-B-Q, but it has not yet said whether On The Border will be rebuilt, sold or reshaped around the franchise base that remains. The company said it will provide more information about the next steps in the next few weeks, and that is now the question that will decide whether the name survives as a chain or only as a handful of surviving outposts on the border of a much smaller business.
