Why is Abuelo's closing 24 restaurants? Reason explained

Abuelo’s, a 36-year-old Mexican restaurant chain, has filed for bankruptcy and announced the closure of 24 of its 40 U.S. locations, leaving 16 stores in operation. The chain is owned by Food Concepts International and was petitioned in the United States Bankruptcy Court of the Northern District of Texas. According to court filings, the assets and liabilities of Abuelo have been listed between 10 and 50 million dollars.

The parent company, Food Concepts International, filed for bankruptcy earlier in September. They asked to have the cases combined. Abuelo’s called this step a strategic move to rebuild its finances and keep running its current locations.

“This decision is a part of a strategic reconstructing process to strengthen our long-term financial position,” Abuelo’s said in a statement obtained by Restaurant Business. “We will continue normal operations and remain committed to maintaining stability for our employees, vendors and customers. Through this time, our loyal customers can join us and expect the same quality and hospitality as we’ve always provided.”

The company reassured workers, suppliers, and customers that they are dedicated to keeping its promises. They said the same quality and service would not change.

Reasons behind Abuelo’s store closures

According to industry reports, the lower sales, increased labor and food expenses, and evolving customer preferences have been a pain for Abuelo in recent years. The chain traffic fell by 5.9 percent in 2023, and the trend continued into 2024. To address these issues, Abuelo has acted to reduce expenses through closing underperforming outlets and cutting overhead.

Abuelo has operating locations in Arizona, Arkansas, Florida, Kansas, Oklahoma, South Carolina, and Texas. The reorganization and contraction are similar to bigger changes in the U.S. restaurant industry, where an older generation chain is reevaluating its business strategy as a means to survive and compete.