San Diego's iconic Rubio's Coastal Grill restaurant chain declared bankruptcy Monday, citing declining sales that began in 2017 and accelerated with the pandemic.
According to Restaurant Business Online, the chain received a $10 million Paycheck Protection Program loan and has $82.3 million in outstanding debt, according to its Chapter 11 bankruptcy filing. It operates or franchises 170 restaurants in California, Arizona and Nevada.
In May and June, Rubio’s permanently closed 26 restaurants, including all of the chain’s locations in Colorado and Florida. The company in a statement said a that a small number of other locations also remain closed.
Rubio’s was founded in 1983, and according to the bankruptcy filing, saw “significant” year-over-year sales growth from 2012 to 2016. The report at Restaurant Business Online says the company's problems began in 2017 when it laid off more than 30% of its line cooks because of a new IRS rule requiring employees to have valid social security numbers as part of the Affordable Care Act.
“Training the less experienced workers hired to replace them diverted critical resources, including Management’s time,” according to the filing. “New store openings in Northern California and Florida suffered as a result.”
The report by Restaurant Business Online said the situation forced the chain to reduce store hours because of staffing issues, leading to poor service and increased customer complaints. Same-store sales declined in the second half of 2017 and into 2018, according to the bankruptcy documents.
The chain has attempted to cut costs by closing stores, slashing corporate pay by up to 30%, furloughing 45% of management employees and more than 1,400 restaurant workers, and more.
(Photo reporting partner 10News)