Red Lobster was cleared to exit bankruptcy several months after financial woes compelled the seafood restaurant chain to close dozens of locations and file for Chapter 11.
Part of the blame was being placed on the chain's endless shrimp promotion.
On Thursday, Red Lobster Management LLC, which owns and operates the restaurant chain, received court approval of its Chapter 11 plan, which includes being acquired by RL Investor Holdings LLC, an entity backed by Fortress Investment Group.
The acquisition is slated to close before the end of September.
EXPERTS SAY RED LOBSTER'S SHRIMP EXCUSE IS 'SMOKE SCREEN' FOR REAL PROBLEMS
Jonathan Tibus, who served as the CEO during the reorganization, will step down and leave the company, according to Red Lobster. Damola Adamolekun will take over as CEO and will be tasked with turning around the company.
"With our new backers, we have a comprehensive and long-term investment plan – including a commitment of more than $60 million in new funding – that will help to reinvigorate the iconic brand while keeping the best of its history," Adamolekun said in a statement.
Red Lobster said it will continue to operate as an independent company, with 544 locations across 44 states and four Canadian provinces.
The company filed for Chapter 11 bankruptcy protection in May, more than 50 years after it opened its doors in 1968.
After the pandemic, Red Lobster feverishly tried to boost traffic to its restaurants by offering a $20 all-you-can-eat shrimp deal the company hoped would serve as a loss-leader and bring in more customers who would become regulars.
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However, customers took full advantage of the deal, with one woman even claiming on social media that she ate 108 shrimp during a four-hour meal.
Kevin Hart, chief sales officer at cash app Upside, which works with over 30,000 restaurants, said its downfall was the result of "short-term thinking."
RED LOBSTER'S ULTIMATE ENDLESS SHRIMP DEAL CONTRIBUTED TO THIRD-QUARTER OPERATING LOSS
The company, like several others in the industry, had a decline in foot traffic. To rebound, Hart claims the company "took a desperate approach to prop up their sales."
"They thought that an influx of customers through their doors would make up for the money they lost on every sale, and it just doesn’t work that way," Hart said.
"Red Lobster overly discounted items – especially premium items – that customers would have paid full price for, and it was a risk that ended up eating at their profit margins."
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These quick-hit solutions and the company's failure to create a "long-term revenue management strategy to attract new customers" cost it its business, according to Hart.
FOX Business' Eric Revell contributed to this report.
