Red Lobster, the well-known seafood chain, has filed for Chapter 11 bankruptcy relief on May 19, 2023. The filing comes after the company closed several locations including those in Wauwatosa and La Crosse, Wisconsin. Red Lobster Management LLC and its related subsidiaries are seeking relief in the United States Bankruptcy Court for the Middle District of Florida.
The chain, which has a history of reorganizing struggling restaurant chains through bankruptcy under CEO Jonathan Tibus, plans to remain open and operate as usual during the reorganization process. The company received a commitment of $100 million in financing from existing lenders to ensure operations continue.
Red Lobster's financial challenges include poor business decisions such as expanding its Endless Shrimp promotion to an everyday event, which led to increased prices and reduced earnings. Last week, the company shut down nearly 50 restaurants nationwide and auctioned off their contents.
The filing comes after several years of struggles for the chain due to reduced traffic in restaurants caused by rising prices and poor business decisions. In 2023, Red Lobster saw a significant loss in its third-quarter earnings following the expansion of its Endless Shrimp promotion to an everyday event.
Red Lobster has faced challenges since the start of the pandemic and has had to close dozens of locations, laying off hundreds of employees due to rising lease and labor costs. The company operates more than 600 locations nationwide.
The bankruptcy filing is not unexpected given the closures and financial struggles faced by Red Lobster in recent years. Other chains such as Tijuana Flats and Brocato's Sandwich Shop have also looked for buyers or declared bankruptcy in the last few months.
Red Lobster, which was founded in 1968, has seen several reinventions throughout its 56-year life span. The company had obtained coveted status among suburban dining options in its heyday.
