- Red Lobster has filed for Chapter 11 bankruptcy.
- The troubled chain said its restaurants will remain open and operating during the process.
Red Lobster has filed for Chapter 11 bankruptcy, the seafood-restaurant chain announced in a statement on Sunday.
The move comes after it was made public last week that the company intends to close more than 50 locations. However, Red Lobster said its restaurants will "remain open and operating as usual during the Chapter 11 process." According to the filing, it has about 550 outlets in 44 states.
CEO Jonathan Tibus said in the Chapter 11 documents that the number of customers had fallen by 30% since 2019 and had "only marginally improved from pandemic levels."
Red Lobster is perhaps best known for its all-you-can-eat shrimp promotion. Last year, to try to increase customer traffic, it started offering the $20 deal every day rather than once a week. But the move backfired and added to the company's losses.
In an earnings call last November, Ludovic Garnier, the finance chief of Thai Union Group, the chain's owner, 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 more than $1 billion in debt, 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 the company.
"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."