Bye-Bye Red Lobster?

( – In a shocking movе, popular seafood chain Red Lobster just filed for Chapter 11 bankruptcy protection shortly after the company closed several of its locations.

Known for its popcorn shrimp and all-you-can-eat seafood offers, the company announced, “This restructuring is the best path forward for Red Lobster.”

“It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth,” stated specialist in corporate restructuring and Red Lobster CEO Jonathan Tibus.

The 56-year-old restaurant chain plans to use the bankruptcy process to streamline its operations, close additional restaurants and prepare for a sale.

It has initiated a “stalking horse” agreement with a company created by its lenders, which is likely to purchase Red Lobster.

Founded in Orlando, Florida, by Bill Darden, Red Lobster was initially established to make seafood dining more affordable for families.

Darden sold the chain to General Mills in 1970, which later spun it off into Darden Restaurants in 1995, a company that now owns several other restaurant chains including Olive Garden.

In recent years, Red Lobster has faced tough competition from fast-casual eateries like Chipotle, and rising costs for leases and labor.

Promotions like their Ultimate Endless Shrimp, which offered unlimited shrimp for $20, proved costly. “We knew the price was cheap, but the idea was to bring more traffic in the restaurants,” Thai Union Group CFO Ludovic Garnier explained on an investor call.

Although the promotion drew in customers, it did not generate the expected profits, with Garnier noting, “we don’t earn a lot of money at $20.”

Thai Union Group, which first invested in Red Lobster in 2016 and increased its investment in 2020, reported a loss of $19 million from its association with the restaurant chain for the first nine months of 2023.

In January, the company said it intended to divest its stake in Red Lobster due to the severe financial impact from the COVID-19 pandemic, industry challenges and soaring operating costs.

Last week, restaurant liquidator TAGeX Brands announced it would auction off equipment from over 50 closed Red Lobster locations across more than 20 states.

Red Lobster’s court filings reveal it has over 100,000 creditors and estimates its assets and liabilities each to be between $1 billion and $10 billion. The chain still operates around 700 locations globally.

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