Del Taco Franchisee Files for Bankruptcy Amid Financial Struggles

Del Taco franchisee Matadoor Restaurant Group has filed for Chapter 11 bankruptcy due to financial struggles, including an unexpected decline in sales and rising operational costs. The company operates 22 units in Georgia and Alabama and lists between 100 and 199 creditors with estimated liabilities between $1 million and $10 million. This is the latest financial hit for Del Taco franchisees, with Newport Ventures declaring bankruptcy earlier this year.

A 22-unit Del Taco franchisee, Matador Restaurant Group, has filed for Chapter 11 bankruptcy protection due to financial struggles, including an unexpected decline in sales and rising operational costs. The company, based in Georgia and Alabama, has listed between 100 and 199 creditors with estimated liabilities between $1 million and $10 million [1]. This is the latest financial hit for Del Taco franchisees, following the bankruptcy of Newport Ventures earlier this year.

Matador's financial difficulties began in late 2024, with the company citing "company growth, an unexpected decline in sales, and rising operational costs" in its court filings [2]. To bridge cash flow issues, Matador took out multiple merchant cash advance (MCA) loans, which ultimately exacerbated its financial distress due to excessive fees, interest rates, and aggressive payback schedules [2]. Despite efforts to reduce expenses, Matador's revenue could not keep up with its MCA obligations, leading to the bankruptcy filing.

The bankruptcy filing highlights broader challenges within the Del Taco franchise system. The Mexican chain has struggled over the past year and a half, with same-store sales declining for five straight quarters. System sales declined 1.8% last year, according to data from Restaurant Business sister company Technomic [1]. The bankruptcy of a large and relatively new Del Taco operator in Colorado prompted the temporary closure of all but one of the chain’s restaurants in the state, which are now being reopened [1].

Parent company Jack in the Box, which acquired Del Taco for $585 million in 2022, is currently selling the brand and expects to find a buyer by the end of the year. Meanwhile, some franchisees are finding it more difficult to secure traditional financing, potentially leading them to turn to alternative sources like MCAs to navigate through challenging times [1].

References:
[1] https://restaurantbusinessonline.com/financing/del-taco-franchisee-georgia-alabama-files-bankruptcy
[2] https://finance.yahoo.com/news/del-taco-franchisee-files-chapter-175506501.html