Red Lobster is considering whether to file for bankruptcy, according to a published report.
The seafood restaurant chain, with headquarters in Orlando, Florida, is weighing the option of filing for Chapter 11 bankruptcy to consolidate its debt, Bloomberg reported, citing “people with knowledge of the matter.”
The business news outlet reported that Red Lobster is being advised by the law firm of King & Spalding on possible restructuring, but added that no final decisions have been made about bankruptcy.
Orlando-based Red Lobster considers filing for bankruptcy, report says https://t.co/3FEuM0AyPe pic.twitter.com/QOXwoxi7M0
— Going Out | South Florida Sun Sentinel (@southflorida) April 17, 2024
Messages left with Red Lobster and King & Spalding were not returned, Bloomberg reported.
According to its website, Red Lobster, which operates approximately 650 restaurants in the United States, Canada and internationally, was founded in 1968 by Bill Darden, who opened the first restaurant in Lakeland, Florida.
The company introduced its popular cheese-flavored biscuits in 1992, according to Bloomberg.
However, Red Lobster has been struggling with financial woes for years, the Sun-Sentinel reported. The company’s main investor, Thai Union Plc, cut ties with the restaurant chain earlier this year and said it will look for a buyer, according to the newspaper.
Thai Union said that Red Lobster’s “ongoing financial requirements no longer align with Thai Union’s capital allocation priorities,” Bloomberg reported.
Golden Gate Capital took over Red Lobster from Darden Restaurants via a leveraged buyout in 2014, according to Bloomberg. Thai Union owned 25% of the chain before buying Golden Gate’s stake in 2020.
Red Lobster is noted for its endless shrimp deal. The company made it a permanent menu option in June, and increased the price from $20 to $25 due to losses, People reported.
In February, the chain announced that it would offer a limited number of guests a free meal of endless lobster, a tribute to Red Lobster’s annual Lobsterfest, according to the magazine.
The endless shrimp promotion contributed to Red Lobster’s loss of $11 million during the third quarter of 2023, according to the Sun-Sentinel. Thai Union said the company was expecting more than a $20 million loss for the entire year.
Red Lobster has had three CEOs over the past two years, according to the newspaper.
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