Red Lobster might soon declare bankruptcy to help fix its money problems. The popular seafood restaurant is thinking about using Chapter 11 bankruptcy.
This legal move could help it manage debts from leases, contracts, and high wages.
Red Lobster Nears Bankruptcy Filing Decision
Bloomberg reported on Tuesday that Red Lobster is close to declaring Chapter 11 bankruptcy. This step is part of a big plan to manage its debt and exit leases and contracts. Sources close to the situation, who chose to stay anonymous, shared this information.
Filing for Chapter 11 would let Red Lobster keep its restaurants open while it discusses how to reorganize its debt privately. However, no final decisions have been made yet.
In November 2023, Red Lobster reported a $11 million loss from its popular Endless Shrimp promotion. Additionally, the seafood chain experienced a $12.5 million loss in the last quarter of the year.
In February, a major shake-up occurred as one of Red Lobster's primary investors decided to pull out. The investor, Thai Union Group, had seen no improvement in the chain's financial health. Thiraphong Chansiri, CEO of Thai Union, explained in a press release that Red Lobster's financial troubles were not in line with the company's goals.
Chansiri highlighted several challenges facing Red Lobster, including ongoing industry difficulties, rising interest rates, and increased costs for materials and labor. These factors contributed to the seafood chain's negative impact on its investors.
"After careful review, our board of directors concluded that Red Lobster's financial needs do not match our own investment priorities," Chansiri stated, indicating the decision to exit their minority stake in the company.
Concern Grows Over Red Lobster's Future
While Red Lobster has not officially confirmed any plans to file for bankruptcy, rumors have left many customers worried that the beloved seafood restaurant might close its doors permanently.
One concerned customer posted a video on X, formerly known as Twitter, rushing to a local Red Lobster. "Me racing to Red Lobster right now to spend all my gift cards before they're no longer honored by the bankruptcy court," they shared in the post.
Another X user speculated that the chain's generous promotions, like the all-you-can-eat seafood special, may have contributed to its financial troubles.
They humorously commented, "Red Lobster: I've got a great idea. All you can eat is seafood... sometimes shrimp...crab legs.. lobster. We're going to make mad money with this promotion. America: have you seen what we can do to a buffet? Several promotions later... Red Lobster: Bankruptcy."
The news has saddened many fans, particularly those fond of Red Lobster's famous Cheddar Bay Biscuits. "We as a society cannot allow this to happen," one fan exclaimed, fearing the loss of these iconic biscuits. Others echoed this sentiment with dramatic pleas like "Noooo, not the cheddar biscuits; take Applebees instead" and "We must save the biscuits!!!"
The concern even took a humorous turn with one person saying, "...if we don't have Cheddar Bay biscuits, what will we offer the aliens when they invade!?!" Comments like "NOT THE BISCUITS" and "Those biscuits are ingrained in our history lol" show how much these treats mean to Red Lobster's patrons.
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