USA – Red Lobster, the renowned casual-dining seafood chain in the United States, has officially filed for bankruptcy following weeks of speculation and the reported closure of nearly 100 of its restaurants.
The company announced that it has secured over US$100M in financing and entered a “stalking horse agreement” to facilitate its sale and management transition to its lenders.
In a press release, Red Lobster revealed plans to leverage the bankruptcy proceedings to implement operational improvements, streamline its business by reducing the number of locations, and seek the sale of most of its assets as a going concern.
CEO Jonathan Tibus expressed optimism about the restructuring, describing it as the most viable path forward.
He emphasized that the process would help the company tackle its financial and operational hurdles, ultimately allowing it to re-emerge stronger and more focused on growth.
“The backing from our lenders and vendors is crucial,” Tibus said.
“It ensures we can navigate the sale process swiftly and effectively while maintaining our commitment to our employees and customers.”
Founded in 1968 and headquartered in Orlando, Florida, Red Lobster had grown to operate over 700 locations worldwide by 2020.
However, the company faced significant challenges in recent years – in 2020, Thai Union, a global seafood conglomerate, acquired a 49% stake in Red Lobster.
Yet, by January the following year, Thai Union withdrew its investment, attributing the decision to the COVID-19 pandemic, persistent industry challenges, rising interest rates, and increasing material and labor costs.
The divestment resulted in a US$530M loss for Thai Union.
According to reports, Red Lobster has partly blamed Thai Union for its struggles.
The company’s bankruptcy filing points to a series of decisions made by former interim CEO Paul Kenny, who was appointed under Thai Union’s direction.
Red Lobster claims that Kenny’s menu changes, which prominently featured Thai Union shrimp, led to operational difficulties and increased costs.
The filing also alleges that Thai Union exerted excessive influence over the company’s shrimp procurement, bypassing standard supply chain and demand planning processes.
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