Red Lobster, the popular seafood restaurant chain, is in the midst of considering a Chapter 11 bankruptcy filing, according to sources. The company has been struggling with mounting debts, as well as high lease and labor costs. To tackle these challenges, Red Lobster has sought advice from the commercial law firm King & Spalding in order to explore options for cost-cutting and restructuring.
While no final decision has been made regarding bankruptcy, such a move would allow Red Lobster to continue its operations while it devises a plan for the future. This plan may involve renegotiating leases and removing certain contracts. Red Lobster has not yet responded to requests for comment.
The restaurant’s financial troubles come after reporting an operating loss of $12.5 million in the fourth quarter of 2023. This is particularly surprising given its popular “Endless Shrimp” promotion, which seemingly failed to bring in substantial profits. Furthermore, Thai Union Group Plc, which acquired the company in 2021, announced plans to exit Red Lobster due to its negative impact on their financial performance.
In an effort to generate publicity, Red Lobster recently introduced their inaugural “Endless Lobster Experience” during their annual Lobsterfest event. The company offered 150 lucky winners in various locations across the country a free two-hour dinner featuring unlimited lobster, two side dishes, and their beloved cheddar biscuits.
Amidst the financial difficulties, Red Lobster has undergone internal changes as well. Jonathan Tibus was named the new CEO, renowned for his expertise in restructuring struggling restaurants. These changes reflect the company’s commitment to finding a way forward.
Red Lobster’s journey began in 1968 when Bill Darden founded the first restaurant in Lakeland, Florida. Over the years, the chain expanded under the management of Darden Restaurants before being taken over by Golden Gate Capital in 2014. Following the impact of the COVID-19 pandemic, Thai Union Group Plc assumed control of the company.
Throughout its history, Red Lobster has become known for its popular endless shrimp deal. The promotion was made a permanent menu option in June, with the price increased to $25 from $20 due to financial losses.
While Red Lobster faces challenges, it is clear that the company remains dedicated to finding a path forward. As it navigates these difficulties, customers can continue to indulge in their love for seafood, hoping for a brighter future for this beloved restaurant chain.
