Red Lobster filed for Chapter 11 bankruptcy protection just days after shutting down dozens of its stores.
The company plans to simplify its operations, close restaurants and pursue a sale through bankruptcy proceedings and as part of the filings, Red Lobster agreed to sell the business to an entity formed and controlled by its lenders.
Driving the news: The chain has been struggling against fast-casual dining chains and has been affected by increasing lease and labor costs.
- Founded in 1968 by Bill Darden, Red Lobster is based in Orlando, Florida. It was later sold to General Mills in 1970, then subsequently spun off as part of Darden Restaurants. The restaurant has been owned by a private equity firm since 2014, and Thai Union Group, one of the world’s largest seafood suppliers, first invested in Red Lobster in 2016 and upped its stake in 2020.
- Thai Union Group intends to exit its minority investment in Red Lobster and recently reported a $19 million share of loss from Red Lobster for the first nine months of 2023.
- The recent closure of over 50 Red Lobster locations was followed by restaurant liquidator TAGeX Brands announcing that it would auction off their equipment.
- Red Lobster has more than 100,000 creditors and estimated assets between $1 billion and $10 billion. Nevertheless, it hopes to operate and expand again post-bankruptcy, even as it keeps over 700 locations worldwide.
What they’re saying: Red Lobster CEO Jonathan Tibus said restructuring is the best path forward for the company.
- “It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth,” Tibus said. “The support we’ve received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests.”
