(NewsSpace.com) – The first Red Lobster was founded in 1968 in Lakeland, Florida. From there, it grew to be a very popular restaurant chain known for its seafood. According to the company website, there are more than 700 locations worldwide. However, it seems as though the chain is now experiencing financial trouble and is looking for a buyer to help it avoid bankruptcy.
As with many restaurants, the owners of Red Lobster are tied up in a number of costly leases and seeking advice from King & Spalding, a multinational law firm, on how to restructure and reduce those costs. However, the company also seems to have two options on the table: filing bankruptcy or finding a buyer. According to recent reports, it’s leaning more toward the latter. It even had a prospective purchaser in mind, but the deal never came to fruition.
The move comes after Red Lobster reported a $11 million loss in the third quarter of 2023, followed by a $12.5 million loss in the fourth quarter. One of the contributing factors is said to be the chain’s “endless shrimp” promotion. The deal was typically offered once a week, but the company decided to offer it daily, hemorrhaging profits despite having raised prices for the promotion. Following this significant drop, one of the owners, Thai Union Group Plc, said it was looking to exit because of the “negative financial contributions to Thai Union and its shareholders.”
There have been internal changes, too. The company named Jonathan Tibus as its new CEO in March. He comes with a wealth of experience in restructuring companies to avoid bankruptcy. Though, for Red Lobster, the writing might be on the wall. It will be hard-pressed to get out of its leases without filing Chapter 11. It has tried to drum up services, this time by offering an endless lobster promotion, but with stiff competition among cheaper eateries, it’s not seeing much success.
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