Red Lobster has filed for Chapter 11 bankruptcy, the seafood restaurant chain announced in a statement Sunday.
This follows last week’s decision to close more than 50 sites. However, Red Lobster added that its remaining restaurants “will remain open and operate as usual during the Chapter 11 process.” It has about 550 sales locations in 44 states, according to the filing.
CEO Jonathan Tibus said in Chapter 11 filings that customer numbers had fallen 30% since 2019 and had “only marginally improved from pandemic levels.”
Red Lobster often ran an all-you-can-eat shrimp promotion. In an attempt to increase attendance last year, it began offering the $20 deal every day, rather than once a week. This decision, however, backfired, worsening his losses.
In an earnings conference call last November, the chief financial officer of the chain’s owner, Thai Union Group, told investors that the promotion was “one of the main reasons for the losses we generated” in the third quarter 2023.
Filing for Chapter 11 bankruptcy allows a company to remain in business while it restructures its assets.
Red Lobster, which has $1 billion in debt, said it would use the process to reduce its number of locations and “pursue the sale of all of its assets as a going concern.”
The company said it received a $100 million debtor-in-possession agreement from its existing lenders, who will now take control of Red Lobster.
“This restructuring is the best path forward for Red Lobster,” Tibus said. “The support we have received from our lenders and suppliers will help ensure we can complete the sales process quickly and efficiently while remaining focused on our employees and guests,” he added.
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