Texas has experienced a series of high-profile restaurant closures this year as national chains and homegrown brands continue to trim costs, close underperforming locations and adapt to changing consumer spending.
While the Lone Star State remains one of the country’s largest restaurant markets, several major brands have either shuttered Texas locations or announced broader downsizing efforts that are affecting the state.
On The Border closes company-owned restaurants
One of the biggest restaurant stories of the year came in June 2026, when On The Border permanently closed all of its company-owned U.S. restaurants. Days later, OTB Hospitality, the operator of the chain, filed for Chapter 7 bankruptcy liquidation, ending an effort to revive the Tex-Mex brand. Although franchised restaurants remain open, the closures affected numerous Texas locations where the chain has long maintained a significant presence.
Papa John’s trims underperforming stores
In June 2026, Papa John’s confirmed it had closed 44 restaurants across 17 states during the first quarter as part of a plan to eliminate roughly 300 underperforming North American locations by 2027. Texas, one of the chain’s largest markets, was among the states impacted as the company focuses on older franchise restaurants with weaker sales.
Local chains also scale back
Texas-based P. Terry’s Burger Stand announced it would permanently close its flagship Capital Plaza restaurant in Austin on June 28, 2026. The closure is tied to the Interstate 35 expansion project rather than financial performance, and employees are expected to transfer to nearby locations.
Meanwhile, Uncle Julio’s permanently closed one of its Dallas-area restaurants earlier this year because of lease-related issues.
More closures may be ahead
Restaurant industry analysts say higher labor costs, inflation and cautious consumer spending continue to pressure operators across the country. As brands streamline operations and focus on profitability, Texas consumers could see additional restaurant closures and restructuring announcements throughout the remainder of 2026.
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