Red Lobster Contemplates Chapter 11 Bankruptcy for Labor Costs, Lease Renegotiations

Red Lobster, a popular seafood chain known for its garlic butter aroma and Old Bay seasoning, is considering filing for Chapter 11 bankruptcy to address rising labor costs and negotiate burdensome property leases and long-term contracts. The move comes after the company reported substantial financial setbacks in recent quarters, largely due to the affordability and appeal of its “Ultimate Endless Shrimp” promotion causing increased customer traffic but not enough profit. Red Lobster disclosed an operating loss of $12.5 million during its fourth-quarter fiscal period compared with a net income of $40.6 million in 2022, leading to the consideration for bankruptcy protection as part of efforts to renegotiate terms with creditors and investors while addressing labor costs. The company did not immediately respond to requests for comment on its potential filing but has previously had various owners including General Mills before being sold to Golden Gate Capital in 2014, which was then bought out by Thai Union last year as the latter announced it planned an exit and wrote-off of Red Lobster investments earlier this year. Jonathan Tibus, a restructuring expert with experience at underperforming restaurants, retailers, and hospitality companies, joined Red Lobster in December 2023 to lead efforts addressing its ongoing financial requirements.