Red Lobster Might Try Bankruptcy To Stay Afloat
The seafood ship could be sinking, but it’s not going down without a fight.
Red Lobster has not been doing well in terms of its finances in recent years. Between some owners jumping ship and an endless shrimp deal that essentially drained Red Lobster instead of boosting it, the brand has faced some challenges.
Now, in an effort to keep the business up and running, Bloomberg reports Red Lobster is considering filing for Chapter 11 bankruptcy. Per the publication's anonymous sources, the seafood chain is considering this move to restructure its debt. The bankruptcy filing would allow Red Lobster to continue operating and reformat the debt it has regarding a number of leases and labor costs.
Earlier this year, the investment group Thai Union, a minority owner of Red Lobster, announced its plans to exit the business as a result of the chain's financial situation. Red Lobster lost $19 million in the first nine months of 2023. "The combination of Covid-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders," said Thai Union's CEO Thiraphong Chansiri in a press release at the time.
Prior to that announcement, Red Lobster made its Ultimate Endless Shrimp deal a permanent fixture on the menu. The chain ended up predicting a $20 million loss in profits for 2023, due in part to making this deal permanent. The chain's leadership simply did not anticipate the high demand for the endless shrimp offering and even raised the price from $20 to $25 in attempt to offset those costs.
As the shrimp and lobster continues to flow, we can only hope that Red Lobster gets its finances in order. Otherwise, how will Cheddar Bay breadsticks ever become anything more than an April Fools' Day prank?