Seafood chain Red Lobster files for bankruptcy

[Dead2009]

Red Lobster, a seafood restaurant that helped define upscale casual dining for the middle class, filed for Chapter 11 protection.

Why it matters: It's one of the largest restaurant bankruptcies in recent years.

Zoom in: The Chapter 11 filing includes a stalking-horse agreement that sees the company selling its business to an entity formed and controlled by its existing term lenders, per The Wall Street Journal.

The company will also receive $100 million in debtor-in-possession financing from its existing lenders.

"The support we've received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests," CEO Jonathan Tibus said in a statement.

By the numbers: Red Lobster said its estimated liabilities were between $1 billion to $10 billion, per its bankruptcy filing.

Catch up quick: Even before the filing in Florida, Red Lobster had to close dozens of locations and lay off hundreds of employees.

The pandemic and inflation tied to rising food and labor costs compounded Red Lobster's challenges.

The big picture: Casual dining as a subsector fared poorly last year, beat out by fast food, fast casual and family dining.

Flashback: Red Lobster was founded in 1968 by restaurant legend Bill Darden, the namesake for Darden Restaurants.

In 1970 it attracted financial backing from food conglomerate General Mills, enabling it to expand nationwide.
It would go on to introduce popcorn shrimp in 1974, Lobsterfest in 1984 and Cheddar Bay Biscuits in 1992.

In 1995, General Mills spun off its restaurant holdings as a publicly traded company under the name Darden Restaurants.

Darden Restaurants sold Red Lobster in 2014 to private equity firm Golden Gate Capital for $2.1 billion.

Golden Gate parted with its remaining stake in the chain in 2020, selling to Thai Union Group.

https://www.axios.com/2024/05/20/red-lobster-bankruptcy-filed?utm_source=twitter&utm_medium=social&utm_campaign=editorial

 

[cpvr]

The all you can eat shrimp deal really screwed them over.

They’re also $1b in debt.

https://twitter.com/x/status/1792580920106467425

 

[Artisan Vistra]

I only went there once years ago, and I remember them for the biscuits because they sell the mix at the store. However, they were nothing special at home.

 

[Grungie]

It’s just chapter 11.

I think I went there once and it’s just an expensive Captain D’s or Long John Silver

 

[Demon_Skeith]

I heard their food was good but declined over the years, I'm not a fan of sea food to start with.

 

[froggyboy604]

It is unfortunate news that Red Lobster is filing for bankruptcy. Hopefully, Red Lobster workers, who lost their jobs, can quickly find new jobs.

 

[Shortie]

We don't have red lobster in the UK but I know of people in the US who have eaten at red lobster and they have enjoyed it.

Such a shame they are having to file for bankruptcy.

 

[Black Angel]

Honestly, you can get most of the stuff they sell either at Restaurant Depot or another restaurant that is owned by the same parent company..

Kind of like KFC and Taco Bell and Yum! Brands..

Also, if you know how to cook (and thanks to the internet it is so easy to learn) then you will pay even less.. and have more food to show for it and you'll probably spend less on the ingredients for it, than you would for your family at a restaurant.

But this really isnt surprising. Covid might have been a factor, but post-Covid greed on part of the restaurant owners in the industry was likely an even bigger factor.

And so, I don't really feel too bad for them all things considered, this is the consequence of putting profits over people. There is a right and a wrong way to do things and this was a fatally wrong choice on their part.

I am not saying this about Red Lobster alone, but rather the industry as a whole.

We don't have red lobster in the UK but I know of people in the US who have eaten at red lobster and they have enjoyed it.

Such a shame they are having to file for bankruptcy.

There a bunch of restaurant copycat cookbooks where they have the recipes for the most popular dishes at various restaurants, but Red Lobster was best known for their Cheddar Bay Biscuits and you can get the mix in a box or buy them frozen from a bunch of stores..

But aside from that, you're not missing much.

 

[cpvr]

It’s just chapter 11.

I think I went there once and it’s just an expensive Captain D’s or Long John Silver

They’re still in massive debt and probably won’t ever turn into being a profitable business again. Long John Silver is a better option than Red Lobster by far.

 

[Grungie]

They’re still in massive debt and probably won’t ever turn into being a profitable business again. Long John Silver is a better option than Red Lobster by far.

Lots of companies turned themselves around after filing chapter 11, so it’s not a guaranteed doom and gloom. It’s up to their management on how their future efforts turn the company around.