A FRANCHISEE for Del Taco has gone bankrupt, making the future for some locations unclear.
The fast food brand experienced a sales dip recently, and it continues to navigate the situation in 2025.
A Del Taco franchisee has filed for bankruptcy this month[/caption]
Matadoor Restaurant Group, owned by Red Door Brands, submitted the Chapter 11 filing on Tuesday, per court documents from the US Bankruptcy Court for the District of South Carolina.
The franchisee currently operates 22 Del Taco restaurants in Alabama and Georgia.
It’s unclear if the bankruptcy will result in closures, but Del Taco already scared consumers earlier this year with 17 shutdowns in Colorado after franchisee Newport Ventures declared bankruptcy.
Matadoor Restaurant Group explained in the court documents that the latter half of 2024 was challenging due to “company growth, an unexpected decline in sales, and rising operational costs.”
Between 100 and 199 creditors were listed in the filing, with debt between $1 million and $10 million.
Matadoor Restaurant Group also took out several cash advance loans and closed two underperforming restaurants in recent months to try and stop the bleeding.
Except, this did the opposite, plunging the franchisee further into debt “due to the excessive fees, excessive effective interest rate, and aggressive payback schedules,” court documents noted.
DEBT DISASTER
At least 10 of the cash advance loans were taken out from nine creditors worth around $2.7 million combined.
“Despite its efforts to reduce expenses, the Debtor’s revenue has not been able to keep up with the MCA obligations,” Tuesday’s documents continued.
The nine creditors were then given an interest in Matadoor’s future sales, with several of them filing UCC-1 statements.
UCC-1 statements are essentially documents filed with the state that give the creditors priority over assets when a company becomes unable to pay back debt, per Investopedia.
A lien was also placed on some accounts for Matadoor Restaurant Group as well, making the bankruptcy filing inevitable to stop the collection and allow the franchisee to reorganize.
Jack in the Box notably owns Del Taco, and it was considering selling the chain for around $575 million earlier this year after buying it in 2021, per QSR Magazine.
Del Taco was also ranked the number one fast food restaurant in the United States in 2024, according to a poll from USA Today.
Top 10 fast-food restaurants in America in 2024
A USA Today poll ranked Del Taco, a Tex-Mex chain, as America’s favorite fast-food restaurant in 2024.
The top ten chains:
- Del Taco
- KFC
- Chick-fil-A
- In-N-Out Burger
- Hardee’s
- Captain D’s
- Taco Bell
- Popeyes
- Zaxby’s
- Arby’s
Source: USA Today
SALES STRUGGLE
Even so, same-store sales in recent quarters haven’t been great.
There was a 3.6% decline in the second quarter of 2025, per an earnings release.
The release also showed franchised same-store sales down 4.2%, with company-owned locations down by 1.7%.
Del Taco has also launched new items to spark interest this year, competing with top rivals like Taco Bell through box-based meals.
The $5 Clásico El Big Box, $7 Mex Faves El Big Box, and $9 Ameri-Mex El Big Box launched in April.
Each featured curated selections of burritos, fires, quesadillas, soft tacos, and beverages.
It’s nearly an identical dupe of Taco Bell’s Luxe Cravings Box lineup introduced in January, which include the $5 Classic Luxe Cravings Box, $7 Supreme Luxe Cravings Box, and $9 Discovery Luxe Cravings Box.
Taco Bell also just launched the Luxe Value Menu, taking aim at McDonald’s.
Customers at the chain also left an employee stunned recently with a “Hulk burrito” concoction on a secret menu.
