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The basics:

• Pappas Restaurants wins auction for On The Border‘s assets
• Tex-Mex chain filed for Chapter 11 in March
• Within NJ, On The Border has four locations

On The Border Mexican Grill & Cantina is set to be acquired out of bankruptcy.

In a May 7 press release, Houston-based Pappas Restaurants said it won the auction for the 80-unit Tex-Mex chain.

On The Border filed Chapter 11 in March. Following that, an affiliate of Pappas Restaurants provided $10 million in debtor-in-possession financing to fund the brand throughout the process and positioned itself as a stalking horse bidder.

Pappas Restaurant Group did not say what the amount of the winning bid was, but FSR Magazine reported in April that the family-owned and operated restaurant group submitted a $15.9 million stalking horse bid for On The Border.

Citing inflationary pressures and changing consumer behavior, On The Border filed for bankruptcy protection.

In a petition filed in U.S. Bankruptcy Court for the Northern District of Georgia, chain’s ownership said it intends to use the proceedings “to drive operational improvements and pursue a sale of substantially all of its assets.” While the reorganization plays out, On The Border said its portfolio of 60 restaurants in the U.S. and internationally will remain open for business.

Within New Jersey, On The Border has restaurants in Princeton, Paramus, New Brunswick and Mount Laurel, according to its website.

Casual dining struggles

Founded 43 years ago in Dallas, On The Border is known for its fajitas, margaritas and endless chips and salad. Similar to other brands that declared bankruptcy over the past year, such as TGI Fridays and Red Lobster, On The Border peaked in the 1990s and early 2000s when casual dining was especially popular.

Similar to its rivals, On The Border has also experienced declining traffic in recent years as consumers pull back spending at full-service eateries. It has also struggled to retain workers as well as faced growing costs as minimum wages rose. In its bankruptcy petition, On The Border reported more than $19.6 million in debt and over 10,000 creditors.

The Chapter 11 filing came weeks after On The Border shut 77 locations across 24 states that it deemed “financially burdensome” due to rent costs and/or financial performance. Locally, the wave of closures impacted Toms River, according to the company’s petition.

‘Honoring the brand’s history’

According to Pappas Restaurants, the transaction is expected to close in the coming weeks, pending bankruptcy court approval.

After that, it aims to enhance On The Border’s menu, operations and guest experience “while honoring the brand’s history and fan-favorite offerings,” the group said in a press release.

Pappas Restaurants also said it will use its experience with high-performing restaurant brands to “strengthen and modernize On The Border locations.”

The group’s nearly 90-unit portfolio includes Pappadeaux Seafood Kitchen, Pappasito’s Cantina, Pappas Bar-B-Q and Pappas Bros. Steakhouse.

In a statement, Pappas Restaurants CEO Mike Rizzo said, “We’re excited to welcome On The Border to the Pappas family. On The Border is a brand with deep heritage and loyal guests, and we see tremendous opportunity to invest in its future. Our shared Texas roots and passion for hospitality make this a natural fit.”

Chris Pappas, co-owner of the group, added, “On The Border has always stood out for its energy and bold flavors—it’s a brand we’ve known and respected for years. This gives us the chance to bring our passion for Tex-Mex to more guests, and we’re excited to build on what makes both brands special.”