Seafood Chain Red Lobster Files for Bankruptcy
By Anna Staropoli May 20, 2024 12:45 pm
reprints
Looks like Red Lobster has tanked.
The seafood chain filed for Chapter 11 bankruptcy in Florida on Sunday, following last week’s abrupt closure of dozens of Red Lobster locations across more than 20 states.
Red Lobster has estimated liabilities of $1 billion to $10 billion and received a $100 million debtor-in-possession financing from its lenders to continue operations, the company announced. It also has been trying to seek a buyer to take over the company.
At least 14 Red Lobster restaurants have shut down so far in New York and New Jersey, Time Out reported, while Florida, Texas, New York and California have experienced some of the highest concentrations of closures.
Both Red Lobster’s recent shutterings and bankruptcy filing come at the tail — literally — of an endless shrimp promotion gone wrong. Last summer, Red Lobster added a $20 endless shrimp deal to its permanent menu.
The result? Too much of a good thing. The offer attracted customers to the tune of more than $11 million of operating losses in the third quarter of 2023.
In March, Red Lobster hired restructuring expert Jonathan Tibus as the company’s new CEO. Tibus has led other restaurants, including Kona Grill and Quiznos, through previous bankruptcy filings.
“This restructuring is the best path forward for Red Lobster,” Tibus said in a statement Sunday. “It allows us to address several financial and operational challenges and emerge stronger and refocused on our growth.”
Red Lobster restaurants not already shuttered will continue to operate as normal during the bankruptcy period, according to the company. The Florida-based chain currently runs roughly 600 restaurants across both the United States and Canada, with the most options in Florida. Notably, Red Lobster operates a 15,000-square-foot eatery at 5 Times Square, a locale that spurred New York Post restaurant critic Steve Cuozzo to recently praise the food and argue against its closure.
The future of that Times Square location remains unclear as the seafood restaurant sheds its shell. A spokesperson for Red Lobster did not immediately respond to requests for comment.
The recent struggles of Red Lobster come as older restaurant chains have struggled following the COVID pandemic while newer upstarts have been moving in to pick up the scraps.
Anna Staropoli can be reached at astaropoli@commercialobserver.com.
