Red Lobster has officially filed for Chapter 11 after rumors of a potential bankruptcy circulated amid headlines of closing restaurants.
Earlier this month, The Dallas Express reported that the fast food chain shuttered dozens of locations nationwide, including the last two Red Lobsters in Dallas proper. Mounting costs, like those related to the company’s unprofitable “Endless Shrimp” campaign, prompted the brand to slim down and reportedly seek out a buyer.
Now, the firm has officially announced it filed for Chapter 11 bankruptcy protection.
In a statement, Red Lobster said it will use the bankruptcy proceedings to “drive operational improvements,” shed locations to help “simplify the business,” and sell nearly everything it can while still keeping the business running.
Currently, Red Lobster has a “stalking horse purchase agreement” in place with its current lenders to purchase the company unless a higher bid is obtained.
“Red Lobster’s restaurants will remain open and operating as usual during the Chapter 11 process, continuing to be the world’s largest and most-loved seafood restaurant company. The Company has been working with vendors to ensure that operations are unaffected and has received a $100 million debtor-in-possession (‘DIP’) financing commitment from its existing lenders,” read the statement.
The seafood chain employs roughly 36,000 people in predominantly part-time roles. It operates 551 locations in the United States and 27 in Canada. Recently, 93 underperforming locations were closed, and the company requested the bankruptcy court reject 108 more of its lease agreements.
If approved, the voided leases would slim down the chain even further.
According to CEO Jonathan Tibus, Red Lobster’s share of diners has dropped substantially since 2019, with the company logging figures roughly 30% below where they had been. While there were positive signs post-pandemic lockdowns, he said, sales over the past year fell sharply, with the company losing $76 million in the 2023 fiscal year.