Fish-Focused Fast Casual Chain Rubio’s Files for Bankruptcy

(Bloomberg) -- Rubio’s Restaurants Inc., the fast-casual chain known for its fish tacos, filed for Chapter 11 bankruptcy Monday with plans to cut debt and hand ownership to its lenders.

The company, which operates 167 restaurants in Arizona, Nevada and California, defaulted on some of its debt in June after pandemic-related shutdowns slammed sales. But the chain was already grappling with cutthroat competition in the fast-casual segment, increased labor costs and a faltering expansion to new markets, according to court papers.

Golub Capital, the company’s pre-bankruptcy secured lender, has agreed to provide an $8 million loan to help Rubio’s cover expenses during bankruptcy. Private equity firm Mill Road Capital, which owns Rubio’s, has agreed to provide an additional $6 million of equity financing as part of its bankruptcy plan, court papers show.

Rubio’s employs more than 3,400 people across its restaurants and corporate offices. Between May and June, the Carlsbad, California-based company permanently closed 26 under-performing stores in California, Arizona, Colorado and Florida, according to court papers.

Co-founder Ralph Rubio discovered fish tacos during several trips to Mexico in college, then founded his namesake restaurant in San Diego in 1983, according to court papers. After expanding in the 1980s and 1990s, the company went public in 1999. Mill Road acquired Rubio’s in 2010 for $91 million.

Rubio’s bankruptcy plan calls for slashing a portion of the company’s debt in exchange for stock in the reorganized company. The company is requesting full forgiveness of a $10 million loan from the Paycheck Protection Program.

The case is Rubio’s Restaurants Inc., 20-12688, U.S. Bankruptcy Court for the District of Delaware.

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