NEW YORK — Amid continuing losses and less than a week after it announced the closure of 50 restaurants, seafood chain Red Lobster has filed for bankruptcy. In a press release, the firm said the Chapter 11 filing was voluntary and intended to “strengthen financial position and maximize value for stakeholders.”
Dozens of Red Lobster locations across the U.S. were put on the chopping block last week with Restaurant liquidator TAGeX Brands announcing the auction of equipment from over 50 Red Lobsters. Following that announcement, the firm also announced the closure of 90 locations, including four in North Carolina: Burlington, Cary, Durham and Rocky Mount.
Red Lobster also announced it has entered into a “stalking horse” purchase agreement to sell its business to an entity formed and controlled by its existing term lenders.
Red Lobster has been struggling for some time. With lease and labor costs piling up in recent years, the Chapter 11 filing could help the chain exit from some long-term contracts and renegotiate many of its leases.
“This restructuring is the best path forward for Red Lobster,” said Jonathan Tibus, the company’s CEO. “It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth.”
The case was filed in the U.S. Bankruptcy Court for the Middle District of Florida with King & Spalding, one of the nation’s largest law firms, representing the company along with several other law firms and financial advisers.
Maintaining stable management has proven difficult, with the company seeing multiple ownership changes over its 56-year history. Earlier this year, Red Lobster co-owner Thai Union Group, one of the world’s largest seafood suppliers, announced its intention to exit its minority investment in the dining chain. For the first nine months of 2023, the Thailand company reported a $19 million share loss from Red Lobster.
And then there’s been the problem of endless shrimp. Last year, Red Lobster significantly expanded its iconic all-you-can-eat shrimp deal. But customer demand overwhelmed what the chain could afford, which also reportedly contributed to the millions in losses.
Red Lobster’s roots date back to 1968, when the first restaurant opened in Lakeland, Florida. In the decades following, the chain expanded rapidly. Red Lobster currently touts more than 700 locations worldwide.
Red Lobster’s remaining restaurants will be open and operating as usual during the Chapter 11 process.