Mexican Restaurant Bankruptcies Surge: Is America’s Love for Burritos and Tacos Reaching Its Limit?

Mexican food — tacos, burritos, enchiladas — has been a perennial favourite across the United States. Yet a spate of recent Chapter 11 bankruptcy filings involving recognizable Mexican-dining brands has sparked a question: is the U.S. market for Mexican restaurants oversaturated, or are broader economic pressures to blame?Recent bankruptcies: the headlines

Several well-known chains have sought Chapter 11 protection or restructured operations in 2024–2025. Notable names include On The Border (OTB Holdings), which filed for Chapter 11 in March 2025 and closed roughly 40 underperforming locations, leaving about 60 operating outlets. Tijuana Flats filed in April 2024 and shut 11 locations before a change in ownership in early 2025. Rubio’s Coastal Grill closed 48 California locations and pursued restructuring in June 2024. Most recently, in October 2025, El Burro Loco Food Corp voluntarily filed for Chapter 11 in Florida, with a restructuring plan deadline set for January 8, 2026.

Why are these restaurants struggling?

The immediate answers most analysts give are twofold: oversaturation and macroeconomic pressure. Over the past decade, Mexican dining options exploded in variety and volume — from small family taquerias to national fast-casual burrito chains. With many competitors vying for the same customers, underperforming locations quickly become liabilities.

At the same time, restaurants nationwide have been squeezed by rising food costs, higher rents, labour shortages and wage pressures, and consumers cutting back on discretionary spending. In filings and restructuring notices, leaders such as OTB’s restructuring officer have explicitly pointed to these macroeconomic factors as major headwinds.

How changing consumer behaviour matters

Americans still love Mexican flavors, but where and how they choose to spend has shifted. Post-pandemic habits, cost-consciousness, and a wealth of competing cuisines mean diners now look for value, convenience, and a memorable experience. Some consumers opt for cheaper home-cooked meals or more budget-friendly takeout solutions, squeezing casual-dining margins.

Key takeaways

• Bankruptcies among Mexican chains reflect both oversaturation in some markets and broader economic stress across the restaurant industry.
• Nearly 45% of Mexican restaurants grew sales in 2024, showing resilience among many operators.
• Survival strategies include menu innovation, stronger digital presence, and reinvigorated local engagement.
• The market is evolving — success will favour operators who adapt quickly rather than those relying solely on scale.