Red Lobster Crawls Out of Bankruptcy After Being Acquired by New Investors
By Isabelle Durso September 6, 2024 5:38 pm
reprints
It looks like Red Lobster pulled itself out of hot water.
The seafood chain announced Thursday that it has successfully emerged from bankruptcy with new ownership and a new CEO at the helm.
Red Lobster received court approval this week for its Chapter 11 plan, which involves reorganization and acquisition by RL Investor Holdings, a new entity backed by Fortress Investment Group, along with co-investors TCW Private Credit and Blue Torch, the company said.
Upon the sale’s completion, which is expected to happen by the end of September, 35-year-old Damola Adamolekun, former CEO of Asian restaurant chain P.F. Chang’s, will become the new CEO of Red Lobster, according to the release.
“This is a great day for Red Lobster,” Adamolekun said in a statement. “With our new backers, we have a comprehensive and long-term investment plan — including a commitment of more than $60 million in new funding — that will help to reinvigorate the iconic brand while keeping the best of its history.”
Meanwhile, Jonathan Tibus, who led Red Lobster during bankruptcy proceedings, will step down from his role and leave the company, the release said.
“I’m proud of what Red Lobster has achieved during this restructuring — the company will emerge from Chapter 11 stronger financially and operationally, and with new backers who are resolutely focused on investment and growth,” Tibus said in a statement. “I’m looking forward to cheering on Red Lobster as an ardent fan in the years ahead.”
Red Lobster will continue to operate as an independent company with more than 30,000 employees and 544 locations across the U.S. and Canada, the company said.
That’s down from the 578 restaurants the Florida-based chain said it was operating when it filed for bankruptcy in May and the 650 restaurants it was operating in 2023, CoStar reported.
Red Lobster, which has been slinging affordable seafood since 1968, was forced to close dozens of locations in May after reporting estimated liabilities of $1 billion to $10 billion — mainly thanks to an unlimited shrimp promotion gone wrong.
The company added a $20 endless shrimp deal to its restaurants’ permanent menu last summer, resulting in more than $11 million of operating losses in the third quarter of 2023, Commercial Observer previously reported. The company quickly headed south after that.
But Red Lobster wasn’t the only restaurant chain struggling this year. Rubio’s, Buca di Beppo, World of Beer and more have filed for bankruptcy after experiencing setbacks following the COVID-19 pandemic, CoStar reported.
Isabelle Durso can be reached at idurso@commercialobserver.com.
