Red Lobster declares bankruptcy, restaurants will remain open

Red lobster has I filed for voluntary Chapter 11 bankruptcy In Florida, the company confirmed in A statement late Sunday night — but it intends to keep its locations open.

The 56-year-old seafood chain, the largest of its kind in the United States, said it would “improve operations, streamline the business by reducing locations, and pursue the sale of virtually all of its assets as a going concern.” “

The company said it lost $76 million last year and has seen a 30% decline in guests since 2019.

As part of the reorganization, Red Lobster has agreed to sell its business to a new entity wholly owned and controlled by its lenders, called Arrange a horse chase. The company said it has obtained a financing commitment of $100 million to fund ongoing operations.

the Bankruptcy petition It lists a company’s assets at between $1 billion and $10 billion and lists debt obligations within the same range.

The chain recently announced that it would close about 99 locations across the country.

But the company confirmed that its remaining restaurants will remain open during the bankruptcy process and that it is “working with vendors to ensure operations are not affected.”

In its bankruptcy filing, Red Lobster said it employs 36,000 workers who serve about 64 million customers annually.

“This restructuring is the best path forward for Red Lobster,” said Jonathan Tebus, CEO of the company. “It allows us to address many of our financial and operational challenges, emerge stronger and refocus on our growth.”

Founded in 1968, Red Lobster had grown 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% net. Since then, the privately owned company has struggled under the burden of debt, while also seeing payments to vendors disrupted.

This coincided with a series of CEO turnover announcements, and ill-fated strategic initiatives including an “all you can eat shrimp” offering that resulted in huge losses.

In the bankruptcy filing, CEO Tebus cited “the difficult macroeconomic environment, a bloated and underperforming restaurant footprint, failed or ill-advised strategic initiatives, and increased competition within the restaurant industry,” as reasons for its struggles. He highlighted the fact that food costs outpace grocery costs, and 50% of US states have increased their minimum wages, reducing Red Lobster’s profit margin.

Perhaps the most notable bad decision was a former CEO’s “endless shrimp” pitch that Tebus said ultimately cost the company $11 million. The circumstances that led to the promotion are under investigation, Tebus said.

The company has also seen several owners over the past five years; The Thai seafood group recently took a controlling stake, but in January it announced its intention to sell it.