On Thursday, September 5th, the renowned chain restaurant Red Lobster was granted approval by the court to restructure and be sold to a group of lenders led by Fortress Investment Group, LLC. This approval allows Red Lobster to avoid bankruptcy.
According to Reuters, Red Lobster stated that the restructuring will enable it to keep all 544 existing stores operational and retain jobs for its 30,000 employees.
Headquartered in Orlando, Florida, this seafood chain operates in 44 states across the United States and 4 provinces in Canada. Prior to filing for bankruptcy, Red Lobster had already closed 93 stores.
The incoming CEO of Red Lobster, Damola Adamolekun, who previously served as the CEO of the Chinese restaurant chain “Huaguan”, expressed that the new owners have committed to investing over $60 million to “revitalize this iconic brand”.
“It’s a great day for Red Lobster,” Adamolekun said in a statement.
Red Lobster filed for bankruptcy in May, and it was reported that the company was seeking to sell through a stalking horse bid, but if no genuine buyers emerged to help repay its roughly $300 million debt, Red Lobster would have to hand over the keys to the lenders led by Fortress Investment Group.
The company attributed its bankruptcy to “challenging macroeconomic conditions, oversized and underperforming restaurant footprint, failed company strategies, and intensifying competition”.
In the 2023 fiscal year, Red Lobster reported a net loss of $76 million. Some of the losses were a result of their “all-you-can-eat shrimp” promotion. Additionally, the sale and leaseback agreements with the previous owner made Red Lobster’s rent too expensive, especially with declining sales.
Founded in 1968, Red Lobster is the largest seafood chain restaurant enterprise in North America. Since 2019, Red Lobster has experienced a 30% decrease in customer traffic.
In recent years, this chain restaurant has undergone several changes in ownership and management. Thai Union Group Plc acquired control of Red Lobster in 2021 but reduced its stake in 2024.