Used by students at the University of Texas in Austin when their homework/studying keeps them up so late that Kerby Lane, a 24-hour restaurant, is the only good place open at which to eat. Only to be used in extremely stressful situations, like having to write a six page paper the night before two midterms.
The expression in no way implies Kerby Lane is itself bad. In fact, it's awesome, especially the pancakes and signature queso.
Student 1: Oh my god, I have so much work to do tonight. I'm going to be up until 4am.
Student 2: Really, man? That bad?
Student 1: Oh yeah. It's Kerby Lane Bad.