SEPARATION AGREEMENT AND GENERAL RELEASE

Exhibit 10.2

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (hereinafter “Agreement”) is made and entered into by and between Frederick Wolfe (“Wolfe”) on the one hand, and Real Mex Restaurants, Inc. and all of its subsidiaries, related entities and affiliates (collectively referred to as “Real Mex”) on the other hand.

RECITALS

A. Wolfe has been employed by Real Mex as President and Chief Executive Officer, and was a member of the Real Mex Board of Directors.

B. Real Mex and Wolfe entered into an Amended and Restated Executive Employment Agreement (“Employment Agreement”) on or about February 28, 2008.

C. Wolfe’s employment with Real Mex terminated effective December 15, 2008, and Wolfe is entitled to benefits under the Employment Agreement subject to his signing this Agreement.

D. Wolfe and Real Mex have reached agreement on the terms and conditions of the termination of his employment from Real Mex.

E. Wolfe and Real Mex desire to settle fully and finally all differences between them, including those arising in any way out of Wolfe’s employment with Real Mex and the termination thereof.

NOW, THEREFORE, in consideration of the premises and promises herein contained, IT IS AGREED AS FOLLOWS:

AGREEMENT

1. This Agreement shall not in any way be construed as an admission by Real Mex that it has acted wrongfully with respect to Wolfe or any other person, or that Wolfe has any rights whatsoever against Real Mex, its affiliates or any of their current or former partners, owners, directors, officers, employees or agents, and Real Mex specifically disclaims any liability to or wrongful acts against Wolfe or any other person, on the part of itself, its divisions, affiliates, related entities or any of its or their current or former partners, owners, directors, officers, employees or agents.

2. Real Mex and Wolfe agree that Wolfe’s employment at Real Mex terminated effective December 15, 2008. Real Mex agrees to pay Wolfe all compensation for services rendered and all accrued, unused vacation pay through December 15, 2008. Wolfe further agrees that his resignation from the Real Mex Board of Directors was effective on December 15, 2008.

3. Subject to Paragraphs 4 and 13 below, Real Mex will pay Wolfe his annual salary of $473,000 for one year in biweekly installments on the payment dates on which that salary normally would be paid, and will commence on January 2, 2009. Checks will be mailed to Wolfe’s home address of record, or through direct deposit, on Real Mex’s normally scheduled paydays. For purposes of applying the provisions of Internal Revenue Code Section 409A to this Agreement, each separately identified amount to which the Wolfe is entitled under this Agreement shall be treated as a separate payment. In addition, to the extent permissible under Section 409A, any series of installment payments under this Agreement, including any payment pursuant to the Company’s regular payroll practices, shall be treated as a right to a series of separate payments.

4. All employment benefits end on the termination date, except as stated herein. Wolfe will become eligible for COBRA benefits on December 16, 2008 and will be notified by the administrator. Wolfe is entitled to elect and pay for COBRA coverage whether or not he signs this agreement. However, as additional consideration for Wolfe signing this agreement, Real Mex will continue to pay its portion of the major medical, executive medical and dental premiums, which Wolfe has in effect, for a period of 12 months provided he elects to continue his health insurance through COBRA. Wolfe’s contributions will continue through standard payroll deductions. Should Wolfe elect to continue medical and dental coverage for the remainder of the COBRA period he must do so at his own expense. Participation in the Company’s deferred compensation plan and all supplemental plans (including but not limited to life insurance, disability, auto allowance/expenses) will be terminated on December 16, 2008.

5. In exchange for Real Mex waiving its rights to enforce the provisions of Section 2.7(a) of the Employment Agreement, Wolfe agrees that (a) the salary continuation payments referenced in Paragraph 3 above shall be reduced by the amount of salary earned by Wolfe in any other job during the one-year severance period, and (b) the COBRA contribution payments referenced in Paragraph 4 above will cease if Wolfe obtains group health insurance through another employer during the one-year severance period. Wolfe agrees to notify Real Mex as soon as reasonably possible of any new employment he obtains within the one-year severance period.

6. Wolfe represents and agrees that he will adhere to the restrictions on soliciting employees set forth in Section 2.7(b) of the Employment Agreement. Wolfe further represents that at no time during his employment at Real Mex has he engaged in conduct involving fraud, theft or embezzlement of any Real Mex assets.

7. Wolfe specifically acknowledges that he is entitled to no further benefits or payments of any kind from Real Mex (including, but not limited to, salary, accrued vacation, moving allowance, severance pay and benefits) pursuant to the terms of the Employment Agreement.

8. All payments required to be made by Real Mex hereunder shall be subject to any and all applicable withholdings, including any withholdings for any related federal, state or local taxes. Wolfe acknowledges that he shall be responsible for any and all income taxes or other taxes incurred by him as a result of his receipt of any payments from Real Mex pursuant to the terms of this Agreement.

9. Wolfe agrees to make himself available by telephone upon reasonable notice to assist Real Mex with respect to any ongoing matters or projects and shall cooperate fully with such matters. Wolfe and Real Mex’s officers and directors further agree that best efforts will be made to avoid making any statements which will in any way disparage, defame or hold the other (including Real Mex’s current and former directors, officers and employees) in a negative light.

10. Wolfe acknowledges and agrees that he has returned to Real Mex all of its property, documents, books, records, reports, contracts, lists, computer disks (or other computer-generated files or data), or copies thereof, created on any medium, prepared or obtained by him or Real Mex in the course of or incident to Wolfe’s employment with Real Mex. Real Mex acknowledges that it has received from Wolfe the following: (a) laptop; (b) blackberry; (c) Fob; and (d) keys.

11. Wolfe acknowledges his continuing confidentiality obligations under (a) Section 2.5 of the Employment Agreement, and (b) any confidentiality agreement signed by him with respect to Real Mex.

12. Wolfe represents that he has not filed any complaints, charges or lawsuits against Real Mex, or against (a) any current or former officers, directors and employees of Real Mex, (b) any current or former affiliate or r