Del Taco Franchisee Files Chapter 11, 22 Locations at Risk Southeast

Matadoor Restaurant Group, a franchise operator of 22 Del Taco locations in Alabama and Georgia, filed for Chapter 11 bankruptcy due to financial struggles stemming from declining sales, rising costs, and aggressive merchant cash advance loans. The company, owned by Red Door Brands, listed liabilities and assets between $1 million and $10 million, and cited challenges in the latter half of 2024, including the impact of high-interest cash advances that worsened its financial condition. This bankruptcy follows similar distress in the Del Taco franchise network, including Newport Ventures’ bankruptcy and closures in Colorado, reflecting broader challenges faced by Del Taco, which has reported five consecutive quarters of same-store sales declines. Del Taco's parent company, Jack in the Box, is reportedly considering selling the brand, which has struggled to grow sales and profitability since its 2021 acquisition. However, the recently opened Del Taco on Cabela Drive in Huntsville, Alabama, is not affiliated with Matadoor and remains unaffected by the bankruptcy. The situation highlights the difficulties faced by smaller franchisees operating outside Del Taco's core California market, particularly those with lower unit volumes and high-cost financing structures.