Red Lobster , which brought affordable shrimp and lobster to middle-class America and grew to become the largest seafood restaurant chain in the world, has filed for bankruprtcy.the NY Times website reports today (May 20, 2024).
The company said it had more than $1 billion in debtand less than $30 million in cash on hand . It plans to sell its business to its lenders , and in turn , it will receive financing to stay afloat. It expects to to close restaurants in the meantime.
Red Lobster, known for its cheddar bay biscuits, crab legs, and shrimp dishes, spread around the country during the 1980s and 1990s.
With 578 restaurants across 44 states and Canada, Red Lobster serves 64 million customers a year, and it brings in $2 billion in annual sales, the company said in its bankruptcy filing. One in five lobster tails purchased in North America is bought by Red Lobster.
But recent mismanagement, compertition, inflation and other factors brought down Red Lobster, analysts and former Red Lobster employees say.
Years of underinvestment in Red Lobster's marketing, food quality, service , and restaurant upgrades hurt t he chain's ability to compete with growing fast--casual and quick--service chains.
Red Lobster started in 1968 by Bill Darden, an architect of the casual dining revolution in America, and General Mills soon bought the restaurant. Red Lobster later became part of Darden Restaurants, the owner of Olive Garden and other chains.
In 2014, Darden sold off Red Lobster to Golden Gate Capital, a private equity firm, for $2.1 billion. Since 2020, seafood distributor The Union Group,based in Thailand, has been the largest Red Lobster shareholder. The Union owns 49% of the company.
Red Lobster has struggled under Thai Union.
The number of customers coming to Red Lobster tumbled 30% since 2019 and has only slightly improved since the pandemic. Earlier this year, Thai Union said it would divest from Red Lobster and take a $530 million loss on its incvestment.
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