After the release of the group's debut album, ex-ByrdMichael Clarke was hired as the band's full-time drummer — he had recently been performing drumming duties for another band led by another ex-Byrd, Dillard and Clark. Bassist Chris Ethridge left out of frustration at the band's lack of success, and in his place the Burritos snagged another member of the disintegrating Dillard and Clark unit, guitarist Bernie Leadon.Chris Hillman moved over to his old role of bass, making the new Burrito line-up Parsons, Hillman, and Pete Kleinow with Leadon and Clarke. Unfortunately, no one had many songs, with Leadon explaining to Parsons biographer David Meyer in 2007, "We started getting together - Gram, Chris, and I - at the A&M lot and trying to write songs. We spent three or four months doing this. It was like pulling teeth. We knew the mechanics of writing music, but the stuff that we did were not Gram's best songs." Hillman concurred to Meyer, "After the brief initial burst Gram and I couldn't seem to hook up again. Burrito Deluxe was recorded without any of the feeling and the intensity of the first album."
The LP is perhaps best remembered for containing the first recording of "Wild Horses." During the time period around these recording sessions, Parsons had developed a close friendship with Keith Richards since their meeting in 1968. Richards gave Parsons a demo tape of "Wild Horses" on December 7, 1969, the day after the concert at Altamont, apparently in an effort to console Parsons after an alleged miscommunication with Michelle Phillips. In the 2004 documentary Gram Parsons: Fallen Angel, Pamela Des Barres states that, "Gram was so proud of the Stones giving him that song to do. 'Cause that was unusual. The Stones didn't just give songs to people." "Lazy Days" had been recorded by Parsons' previous groups, The International Submarine Band and the Byrds, but neither version was released, although the Byrds' version did eventually surface on the 1990 box set. Unlike the band's debut, which was dominated by songs co-written by Parsons and Hillman, Burrito Deluxe is padded with several cover songs, including the Conway Twitty country hit "Image of Me" and the Bob Dylan-penned "If You Gotta Go."
Parsons began to lose interest in the Burritos and, after missing too many gigs or showing up too inebriated to play, he was fired from the band later in 1970. In the Fallen Angel documentary, Chris Hillman cites Parson's lack of ambition and his growing infatuation with the Rolling Stones as the main reasons for the album's failure: "Gram was starting to wear some pretty interesting stuff on stage. He'd have a scarf and he'd have one of his girlfriend's shirts on, and I used to say, 'This guy is tryin' to look like a cross between Dottie West and Mick Jagger'...Towards his last days in the Burritos, he would be going to these gigs we'd do in a limousine - I mean, these were $500 a night shows - and we'd be piling into the car with our gear and Gram would show up in a limousine. Gram came from a very wealthy family and had this ongoing trust fund, which was about $55,000 a year, and it's sort of like he had been seduced by all that without quite earning it yet." Parsons later blamed the album's shortcomings on producer Jim Dickson; in the 2007 book Twenty Thousand Roads biographer David Meyer quotes Parsons: "The second album was a mistake - it was a mistake to get Jim Dickson involved. We should have been more careful than that." Parsons is also quoted expressing his dissatisfaction with steel guitarist "Sneaky" Pete Klienhow: "Chris (Hillman) knew all along that Sneaky wasn't the right steel player. Chris digs Sneaky more than I do 'cause he likes that dut dut dut dut that Sneaky could pull off. I wanted a Tom Brumely. Then I'd settle for anybody that played slide guitar with pedals on it. I wanted a brilliant-sounding, good, fast, pedal steel player."
Unlike the intriguing album cover that graced The Gilded Palace of Sin, the artwork for Burrito Deluxe is almost a throwaway by comparison, featuring a pair of stale burritos, the upper one edged in hand-sewn sequins, with a small photograph of the band wearing white coveralls superimposed over one of the burritos.
Burrito Deluxe was a commercial disappointment, failing to crack the Billboard 200. It was also a critical disappointment, unlike the band's lauded debut LP, with Mark Deming of AllMusic opining, "... while it is hardly a bad album, it's not nearly as striking as The Gilded Palace of Sin. Parsons didn't deliver many noteworthy originals for this set, with 'Cody, Cody' and 'Older Guys' faring best but paling next to the highlights from the previous album." In the Parson's article "The Lost Boy," Mojo writer John Harris observes that the album "mislaid just about all of the charm that had accompanied their debut, though it contained a handful of decent songs: 'Older Guys,' 'Cody Cody,' and 'High Fashion Queen.'" In the liner notes to the 1997 reissue that paired it with the Burritos's debut, Sid Griffin writes of Burrito Deluxe, "Out went the R&B torch ballads, in came rock and roll...Burrito Deluxe is nonetheless required listening in Introducing To Country-Rock 101 at university."