Restaurant chain Red Lobster said Sunday it has filed for Chapter 11 bankruptcy, the news coming after an all-you-can-eat offering reportedly caused financial trouble.
NBC News reported Monday that the restaurant explained it would “drive operational improvements, simplify the business through a reduction in locations, and pursue a sale of substantially all of its assets as a going concern.”
The company plans to sell the business to an entity owned by its lenders after receiving a $100 million financing commitment from them to keep operations up and running.
Red Lobster recently announced it was shutting down 100 locations across the nation. It listed Alabama, Colorado, Georgia, California, and Florida as some of those being closed, according to a Truth Voices article published Tuesday:
CEO and Founder of TAGeX Brands, Neal Sherman, announced in a post on LinkedIn on Monday that his company would be hosting “the largest restaurant liquidation” through an online auction. The TAGeX website listed auctions for 48 Red Lobster locations throughout the U.S. that had been closed and would be auctioning off kitchen items and furniture from the locations.
Red Lobster locations in La Crosse, Wisconsin, Watertown, New York, Gaithersburg, Maryland, and Bloomingdale and Danville, Illinois, were among the restaurants that were closed.
The company said the locations that have not been shut down will stay open as the bankruptcy process moves forward, the NBC report added.
“Founded in 1968, Red Lobster grew to nearly 700 locations by 2019. But it failed to regain its footing after the pandemic. Between 2019 and 2023, U.S. sales fell 13% on net. The privately held company has since struggled under its debt load, while also seeing payments to vendors disrupted,” it noted:
In April, Red Lobster was reportedly considering filing for bankruptcy after its all-you-can-eat shrimp offering resulted in an $11 million loss in 2023, according to Truth Voices.
“The business’s $20 shrimp promotion came after it experienced a $5.4 million loss in the second quarter of 2023, but the deal was so popular with customers that it failed miserably at increasing profits,” the outlet said.
Video footage shows people eating plate after plate of shrimp, and one woman said her goal was to eat 65 of them in one sitting, according to Inside Edition:
However, when a reporter for the outlet went to a Red Lobster in New York City, he noticed the all-you-can-eat shrimp deal was only being offered on Mondays.
