Red Lobster files for bankruptcy, restaurants remain open

There is red lobster Filed for voluntary Chapter 11 bankruptcy In Florida, the company confirmed Report Sunday night — but wants to keep its locations open.

The 56-year-old seafood chain, the largest of its kind in the U.S., will “drive operational improvements, simplify business by reducing locations, and sell all of its assets as a going concern.”

The company said it lost $76 million last year and saw a 30% drop in guest numbers from 2019.

As part of its restructuring, Red Lobster agreed to sell its business to a new entity wholly owned and controlled by its creditors. Hunting horse arrangement. The company said it has secured a $100 million financing commitment to fund ongoing operations.

The Bankruptcy Petition Lists the company’s assets between $1 billion and $10 billion and lists debt obligations within the same range.

The chain recently announced the closing of about 99 locations across the country.

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

Red Lobster said in its bankruptcy filing that it employs 36,000 workers and serves 64 million customers a year.

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

Founded in 1968, Red Lobster has grown to nearly 700 locations by 2019. But it failed to regain its footing after the pandemic. Between 2019 and 2023, US sales fell by a net 13%. The privately-owned company has struggled under its debt load, while payments to vendors have also been hampered.

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That coincided with a stream of executive turnover announcements and ill-fated strategic initiatives, including an all-you-can-eat shrimp offering.

In the bankruptcy filing, CEO Tibus cited “a difficult macroeconomic environment, a bloated and underperforming restaurant footprint, failed or ill-advised strategic initiatives and increased competition in the restaurant industry” as reasons for its struggles. He pointed out that food costs are higher than groceries, and that 50% of US states have increased their minimum wages, reducing Red Lobster’s profit margins.

Chief among the bad decisions was the previous CEO’s “endless shrimp” offering, which ultimately cost the company $11 million, Dibus said. The circumstances leading to the promotion are under investigation, Dibus said.

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

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