Red Lobster has filed for voluntary Chapter 11 bankruptcy in Florida, the company confirmed in a statement late Sunday night \u2014 but it intends to keep its locations open. <\/p>\n
The 56-year-old seafood chain, the largest of its kind in the U.S., said it would \u2018drive operational improvements, simplify the business through a reduction in locations, and pursue a sale of substantially all of its assets as a going concern.\u2019<\/p>\n
The company said it lost $76 million last year and had seen a 30% drop-off in guest count since 2019. <\/p>\n
As part of its reorganization, Red Lobster has agreed to sell its business to a new entity wholly owned and controlled by its lenders, a so-called stalking horse arrangement. The company said it had received a\u00a0$100 million financing commitment to fund ongoing operations.<\/p>\n
The bankruptcy petition lists the company\u2019s assets as worth between $1 billion and $10 billion and lists debt obligations within the same range. <\/p>\n
The chain had recently announced it was closing some 99 locations across the country.<\/p>\n
But the company stressed that its remaining restaurants will stay open during the bankruptcy process and that it has been \u2018working with vendors to ensure that operations are unaffected.\u2019 <\/p>\n
In its bankruptcy filing, Red Lobster stated it employs 36,000 workers who serve some\u00a064 million customers per year. <\/p>\n
Jonathan Tibus, the company\u2019s CEO, said: \u2018This 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.\u2019<\/p>\n
Founded in 1968, Red Lobster grew to nearly 700 locations by 2019. But it failed to regain its footing after the pandemic. Between 2019 and 2023, U.S. sales fell 13% on net. The privately held company has since struggled under its debt load, while also seeing payments to vendors disrupted. <\/p>\n
That\u2019s coincided with a stream of executive turnover announcements, and ill-fated strategic initiatives including an all-you-can-eat shrimp offering that resulted in heavy losses. <\/p>\n
In the bankruptcy filing, Tibus cited \u2018the difficult macroeconomic environment, a bloated and underperforming restaurant footprint, failed or ill-advised strategic initiatives, and increased competition within the restaurant industry\u2019 as the reasons for its struggles. He highlighted the fact that dining costs have outweighed groceries, and that 50% of U.S. states had increased their minimum wages, further reducing Red Lobster\u2019s profit margin. <\/p>\n
Perhaps the most prominent of the poor decisions was an \u2018endless shrimp\u2019 offering by a previous CEO that Tibus said ultimately cost the company $11 million. The circumstances that led to the promotion are under investigation, Tibus said. <\/strong><\/p>\n The company has also seen multiple owners over the past five years; most recently seafood conglomerate Thai Union had taken a controlling stake, but it announced in January its intention to sell it.<\/p>\n<\/p>\n Red Lobster has filed for voluntary Chapter 11 bankruptcy in Florida, the company confirmed in a statement late Sunday night \u2014 but it intends to keep its locations open. The 56-year-old seafood chain, the largest of its kind in the U.S., said it would \u2018drive operational improvements, simplify the business through a reduction in locations, […]<\/p>\n","protected":false},"author":0,"featured_media":4630,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-4629","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/4629","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=4629"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/4629\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/4630"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=4629"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=4629"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=4629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}