Iconic Restaurant Chain With 650 Locations to File Bankruptcy Next Week

Red Lobster, the struggling seafood restaurant chain, is expected to seek bankruptcy protection in the coming days, according to reports from The Wall Street Journal and Bloomberg.

The company plans to file for Chapter 11 bankruptcy in Orlando, Florida, before the Memorial Day weekend, following the abrupt closure of at least 48 locations across the United States.

The bankruptcy filing will enable Red Lobster to restructure its debt, terminate long-term contracts, and negotiate new leases in an effort to stabilize its financial situation.

The chain, which began as a single restaurant in Lakeland, Florida, in 1968, has grown to approximately 650 locations nationwide, but has been grappling with significant financial challenges in recent years.

CFO Ludovic Garnier partially attributed the company’s record losses of $11 million last year to its popular “Endless Shrimp” promotion.

Initially priced at $20, the all-you-can-eat deal drew in more customers than anticipated, as it went viral on social media platforms like TikTok.

Garnier explained, “For those who have been in the US recently, $20 was very cheap. And the rationale for this promotion was to say we knew the price was cheap, but the idea was to bring more traffic in the restaurants.”

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Despite later increasing the price to $25, the promotion’s popularity continued to impact the company’s bottom line.

Red Lobster’s financial woes have been exacerbated by expensive leases and high labor costs.

The chain, famous for its cheese-flavored biscuits, has had multiple owners in recent years, including Darden restaurant group, Golden Gate Capital, and most recently, Thai Union.

However, Thai Union announced that its “ongoing financial requirements no longer align with Thai Union’s capital allocation priorities.”

The sudden closures have left Red Lobster employees scrambling to find new jobs, with many claiming they were laid off without warning.

One former employee shared her experience on TikTok, stating, “Y’all know Red Lobster was going bankrupt, they don’t have no money to be playing around and out location was… we wasn’t the best location, so it makes sense. I ain’t gonna lie, if you work at Red Lobster, you need to start finding something else to do.”

As Red Lobster navigates this challenging period, the company is reportedly seeking advice from the law firm King & Spalding.

While the decision to file for bankruptcy has not been finalized, it would allow the restaurant chain to continue operating while restructuring its finances.

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The coming weeks will be crucial for Red Lobster as it works to secure its future and rebuild its reputation in the competitive casual dining industry.