red lobster

Red Lobster Files For Bankruptcy After Shutting Down Dozens Of Their Restaurants

Red Lobster has filed for Chapter 11 bankruptcy protection just days after closing down dozens of their restaurants throughout the US. 

The US seafood restaurant chain has been financially struggling due to lease and labor costs, and a customer demand that the chain has not been able to afford to keep up with. This, reportedly, added to the millions of dollars they lost. 

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In a court filing, Red Lobster stated that it had over 100,000 creditors and estimated assets between $1 billion and $10 billion. The company’s predicted liabilities are also between $1 billion and $10 billion. 

The court document was signed by CEO Jonathan Tibus. Tibus is a corporate restructuring specialist who took the position at Red Lobster in March. 

TAGeX Brands, a restaurant liquidator, announced last week that it is gearing up to auction off the equipment from over 50 Red Lobster locations that were recently closed down as a result of the chain’s “footprint rationalization.”

The closed down locations span over 20 states, and have drastically changed the presence of Red Lobster in cities like Denver, San Antonio, Sacramento, and Indianapolis, according to the Guardian

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Red Lobster was founded in Orlando, Florida by Bill Darden. Darden’s initial vision for the restaurant was to bring affordable and accessible seafood restaurants to families across the nation. 

In 1970, Darden sold Red Lobster to General Mills. Later on, General Mills formed Darden Restaurants, which owns chains such as Olive Garden, and in 1995, they spun the company off.

Rising lease and labor costs are just one of the reasons Red Lobster had to file for bankruptcy. Increasing competition from other successful chain restaurants, such as Chipotle, has also contributed to the seafood restaurants losses. 

They’re famous meal deals, such as all-you-can-eat shrimp and lobster packages, became extremely expensive for Red Lobster to keep up with. 

More recently, last year’s Ultimate Endless Shrimp promotion, which offered al-you-can-eat shrimp for $20, caused the chain to lose millions of dollars, according to reports

“We knew the price was cheap, but the idea was to bring more traffic to the restaurants,” Ludovic Garnier, the chief financial officer of Thai Union Group, Red Lobster‘s former co-owner, said.