Founded in Dallas in 1982, On the Border has filed for Chapter 7 bankruptcy liquidation after closing its last 28 corporate restaurants on June 12. The Mexican casual-dining franchise brand, which once operated 166 locations across the U.S., collapsed under more than $6.2 million in liabilities, with just five franchised locations remaining open in the country.
The Chapter 7 filing, submitted on June 19, 2026, in the Southern District of Texas, marks the final chapter of a franchise concept that spent more than four decades on the American restaurant scene. At the time of filing, On the Border listed only $752,945 in assets against $6.2 million in liabilities. Its largest creditor is Pappas Restaurants, the Houston-based multiconcept operator, which is owed more than $4.7 million.
A Year of Failed Rescue Attempts Under Pappas
Pappas Restaurants acquired On the Border in May 2025, after the chain emerged from a Chapter 11 bankruptcy restructuring filed the previous March. Pappas extended a $10 million debtor-in-possession loan to keep the brand operating through that process. When Pappas took ownership, the chain had approximately 80 restaurants. By the end of 2025, that number had fallen to 57, according to data from Technomic. On June 12, 2026, the company shuttered all 28 remaining company-operated locations, citing a “thorough evaluation of the business.” Days later, it filed to liquidate its remaining assets through Chapter 7, which allows creditors to recover some funds through a court-supervised sale. The five surviving On the Border locations in the U.S. are franchise-operated and continue to run independently. South Korea also hosts a small number of international franchise units.
A Decades-Long Decline in Casual Dining
On the Border’s trajectory reflects broader pressures that have weighed on full-service casual dining over the past two decades. The brand, known for tableside guacamole, fajitas, and margaritas, was acquired by Brinker International, the parent of Chili’s, in 1994. At its peak in 2007, the chain operated 166 locations. Persistent sales declines beginning in 2008 led Brinker to sell it to Golden Gate Capital in 2010, and the brand changed hands again in 2014 when Argonne Capital Group took over. Multiple ownership transitions, combined with a wave of closures in 2024 and 2025, steadily reduced the footprint. In its final 12 months of operation, On the Border generated more than $111 million in revenue, plus $1.5 million in franchise royalties, according to bankruptcy documents. Its collapse follows a pattern seen across several full-service chains in recent years, including Hooters and Red Robin, as consumer preferences and cost structures have shifted.
What Remains of the Brand
The Chapter 7 process will allow the liquidation of On the Border’s personal property assets to partially reimburse creditors. The brand’s five remaining U.S. franchise locations are not part of the Chapter 7 estate and may continue to operate under existing agreements, though their long-term status will depend on individual franchisee decisions. International franchised units in South Korea are also unaffected by the U.S. filing. Whether the brand name itself or any intellectual property will be sold in the process has not been publicly disclosed at this stage.
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