Current:Home > BackRed Lobster seeks bankruptcy protection days after closing dozens of restaurants-LoTradeCoin
Red Lobster seeks bankruptcy protection days after closing dozens of restaurants
View Date:2024-12-23 23:49:23
Red Lobster, the casual dining chain that won fans with inventions like popcorn shrimp and “endless” seafood deals, has filed for Chapter 11 bankruptcy protection.
The 56-year-old chain made the filing late Sunday, days after shuttering dozens of restaurants.
“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,” said Red Lobster CEO Jonathan Tibus, a corporate restructuring expert who took the top post at the chain in March.
Red Lobster said it will use the bankruptcy proceedings to simplify its operations, close restaurants and pursue a sale. As part of the filings, Red Lobster has entered into a so-called “stalking horse” agreement, meaning it plans to sell its business to an entity formed and controlled by its lenders.
The Orlando, Florida-based chain was founded by Bill Darden, who wanted to make seafood restaurants more accessible and affordable for families. Darden sold Red Lobster to General Mills in 1970. General Mills later went on to form Darden Restaurants, which owns Olive Garden and other chains, and spun the company off in 1995.
In recent years, Red Lobster has been struggling with increasing competition from fast casual chains like Chipotle as well as rising lease and labor costs. Its all-you-can eat deals for shrimp and lobster also became increasingly expensive.
Last fall, Red Lobster lost millions of dollars on its Ultimate Endless Shrimp promotion, which charged $20 for all-you-can-eat shrimp deal.
“We knew the price was cheap, but the idea was to bring more traffic in the restaurants,” Ludovic Garnier, the chief financial officer of Thai Union Group, Red Lobster’s former co-owner, said in an earnings call with investors.
Garnier said the deal did work, and restaurant traffic increased. But more guests opted for the $20 deal than Red Lobster expected, Garnier said, adding “we don’t earn a lot of money at $20.” For the first nine months of 2023, Thai Union Group — which is one of the world’s largest seafood suppliers — reported a $19 million share of loss from Red Lobster.
In January, Thai Union Group announced its intention to exit its minority investment in Red Lobster. CEO Thiraphong Chansiri said the COVID-19 pandemic, industry headwinds and rising operating costs had hit the dining chain hard and caused “prolonged negative financial contributions to Thai Union and its shareholders.”
Thai Union Group first invested in Red Lobster in 2016 and upped its stake in 2020.
Restaurant liquidator TAGeX Brands announced last week that it would be auctioning off the equipment of over 50 Red Lobster locations that were recently closed. The store closures span across more than 20 states — reducing Red Lobster’s presence in cities like Denver, San Antonio, Indianapolis and Sacramento, California.
The seafood restaurant chain said in a court filing that it has more than 100,000 creditors and estimated assets between $1 billion and $10 billion. The company’s estimated liabilities are between $1 billion and $10 billion.
Red Lobster operates 700 locations worldwide.
veryGood! (7719)
Related
- Surprise bids revive hope for offshore wind in Gulf of Mexico after feds cancel lease sale
- George Santos says ex-fundraiser caught using a fake name tried a new tactic: spelling it backwards
- Post Malone Reveals He Lost 55 Lbs. From This Healthy Diet Tip
- 'Reservation Dogs' co-creator says the show gives audiences permission to laugh
- Sister Wives’ Kody Brown Explains His Stance on His Daughter Gwendlyn Brown’s Sexuality
- Messi speaks publicly for 1st time since joining Inter Miami and says he’s happy with his choice
- Leading politician says victory for Niger’s coup leaders would be ‘the end of democracy’ in Africa
- The 10 best Will Ferrell movies, ranked (from 'Anchorman' to 'Barbie' and 'Strays')
- Trump hammered Democrats on transgender issues. Now the party is at odds on a response
- Rosalynn Carter marks 96th birthday at home with the former president, butterflies and ice cream
Ranking
- NFL Week 10 winners, losers: Cowboys' season can no longer be saved
- CLEAR users will soon have to show their IDs to TSA agents amid crackdown on security breaches
- Natural history museum closes because of chemicals in taxidermy collection
- Trump PAC foots bill for private investigator in Manhattan criminal case, E. Jean Carroll trial
- New Mexico secretary of state says she’s experiencing harassment after the election
- Pentagon considering plea deals for defendants in 9/11 attacks
- Jeremy Allen White Has a Shameless Reaction to Alexa Demie's Lingerie Photo Shoot
- Connecticut kitten mystery solved, police say: Cat found in stolen, crashed car belongs to a suspect
Recommendation
-
What to know about Mississippi Valley State football player Ryan Quinney, who died Friday
-
Are you a robot? Study finds bots better than humans at passing pesky CAPTCHA tests
-
Raise a Glass to Ariana Madix's New Single AF Business Venture After Personal Devastation
-
Cyberattack keeps hospitals’ computers offline for weeks
-
NFL playoff picture Week 10: Lions stay out in front of loaded NFC field
-
Metals, government debt, and a climate lawsuit
-
Appeals court strikes down Utah oil railroad approval, siding with environmentalists
-
Ex-wife charged in ambush-style killing of Microsoft executive Jared Bridegan