Z’Tejas Southwestern Grill has filed for Chapter 11 bankruptcy protection for the second time since 2015 and shuttered four units.
Michael Stone, a general partner in Cornbread Ventures LP, which was created to acquire the Austin, Texas-based casual-dining chain and steer it through its first bankruptcy, calls the latest move “pruning the dead branches and letting the tree grow.” Three Z’Tejas restaurants in Arizona and one in Austin were closed in recent days.
It is understandable to question the health of the concept, Stone says, but notes that the remaining four units—two in Texas and two in Arizona—are profitable. “I believe strongly in the viability of the brand,” he says. “Z’Tejas has great brand equity. It’s got good brand recognition.”
In hindsight, Stone says, Cornbread Ventures would’ve rejected the leases of the underperforming units when it acquired the chain in 2015. “We tried to give it a go,” he says.
During the bankruptcy process, Z’Tejas’ owners will look at all aspects of the operation, including the efficacy of the executive team, Stone says.
Fleming Restaurants Inc. opened the first Z’Tejas restaurant in Austin in 1989. At the time of its bankruptcy filing in 2015, it had nine units.