(20 May 2024)
RESTRICTION SUMMARY:
ASSOCIATED PRESS
Lincolnwood, Illinois – 20 May 2024
1. Various exteriors & signage outside Red Lobster restaurant
STORYLINE:
Red Lobster, the casual dining chain that brought seafood to the masses with inventions like popcorn shrimp and “endless” seafood deals, has filed for Chapter 11 bankruptcy protection.
The 56-year-old chain has been struggling in recent years with rising lease and labor costs, increased competition and changing customer tastes.
The seafood restaurant chain said in a court filing late Sunday that it has more than 100,000 creditors and estimated assets between $1 billion and $10 billion.
The company’s estimated liabilities are between $1 billion and $10 billion.
Red Lobster said it will use the bankruptcy proceedings to simplify its operations, close restaurants and pursue a sale. As part of the filings, Red Lobster has entered into a so-called “stalking horse” agreement, meaning it plans to sell its business to an entity formed and controlled by its lenders.
In recent years, Red Lobster has been struggling with increasing competition from fast casual chains like Chipotle and Panera as well as rising lease and labor costs. Its all-you-can eat deals for shrimp and lobster, which it has offered for decades, also became increasingly expensive.
The Orlando, Florida-based chain was founded by Bill Darden, who wanted to make seafood restaurants more accessible and affordable for families.
Darden got his start in the restaurant business in Waycross, Georgia, in 1938, when he opened The Green Frog. He boldly refused to segregate the restaurant’s patrons, which went against state laws at the time. When he opened the first Red Lobster near Orlando in 1968, he again invited customers to sit anywhere they chose.
Darden sold Red Lobster to General Mills in 1970, and he continued to run restaurants as a General Mills executive. General Mills later went on to form Darden Restaurants, which owns Olive Garden and other chains.
Darden Restaurants was spun off from General Mills in 1995.
Red Lobster had legions of fans for dishes like lobster linguini and its buttery Cheddar Bay biscuits.
But the restaurant had trouble keeping up with competitors and bringing in younger customers. Darden Restaurants sold Red Lobster to a private equity firm in 2014.
Thai Union Group, one of the world’s largest seafood suppliers, first invested in Red Lobster in 2016 and upped its stake in 2020.
Then last fall, Red Lobster lost millions of dollars on its Ultimate Endless Shrimp promotion, which charged $20 for all-you-can-eat shrimp deal.
Garnier said the deal did work, and restaurant traffic increased. But more guests opted for the $20 deal than Red Lobster expected, Garnier said, adding “we don’t earn a lot of money at $20.” For the first nine months of 2023, Thai Union Group reported a $19 million share of loss from Red Lobster.
In January, Thai Union Group announced its intention to exit its minority investment in Red Lobster. CEO Thiraphong Chansiri said the COVID-19 pandemic, industry headwinds and rising operating costs had hit the dining chain hard and caused “prolonged negative financial contributions to Thai Union and its shareholders.”
Restaurant liquidator TAGeX Brands announced last week that it would be auctioning off the equipment of over 50 Red Lobster locations that were recently closed.
The store closures span across more than 20 states — reducing Red Lobster’s presence in cities like Denver, San Antonio, Indianapolis and Sacramento, California.
AP video shot by Teresa Crawford
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