Red Lobster announced it was filing for Chapter 11 bankruptcy protection, but said its 550 restaurants will keep operating during the restructuring.
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Red Lobster has filed for Chapter 11 bankruptcy, the seafood restaurant chain announced in a statement on Sunday.
It comes after last week's decision to close more than 50 locations. However, Red Lobster added its remaining restaurants will "remain open and operating as usual during the Chapter 11 process." It has about 550 outlets in 44 states, per the filing.
CEO Jonathan Tibus said in the Chapter 11 documents the number of customers had fallen by 30% since 2019, and had "only marginally improved from pandemic levels."
Red Lobster has often run an all-you-can-eat shrimp promotion. To try to increase footfall last year it started offering the $20 deal every day, rather than once a week. The move backfired, however, adding to its losses.
In an earnings call last November, the finance chief of the chain's owner, Thai Union Group, told investors the promotion was "one of the key reasons for the losses we generated" in the third quarter of 2023.
Filing for Chapter 11 bankruptcy allows a company to stay in business while it restructures its assets.
Red Lobster, which has debts of $1 billion, said it will use the process to reduce its number of locations and "pursue a sale of all its assets as a going concern."
The firm said it had received a $100 million debtor-in-possession agreement from its existing lenders, which will now take control of Red Lobster.
"This restructuring is the best path forward for Red Lobster," Tibus said. "The support we've received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests," he added.
