Red Lobster filing for bankruptcy as early as next week

Red Lobster filing for bankruptcy as early as next week, per WSJ.

Sources familiar with the situation informed the Journal that the company, burdened with hundreds of millions in debt, intends to file a Chapter 11 bankruptcy petition in Orlando before Memorial Day.

In April, Bloomberg reported that the restaurant company was contemplating seeking Chapter 11 bankruptcy protection.

The bankruptcy announcement follows Red Lobster's closure of over 50 locations across the US, confirmed by restaurant liquidator TAGeX Brands to Business Insider on Monday. Red Lobster operates approximately 650 locations nationwide.

States affected by Red Lobster closures include California, Colorado, Florida, New York, and Texas.

The popular seafood chain has faced financial difficulties in recent years, with reasons such as changing consumer preferences and a failed all-you-can-eat shrimp promotion being cited by Red Lobster and industry observers for its decline.

These financial challenges led to Thai Union Group, which had acquired majority ownership of Red Lobster in 2020, withdrawing its investments. During a February earnings call, Thai Union Chief Executive Thiraphong Chansiri stated, "We're going to exit. We are not going to inject any more money into Red Lobster."

Chansiri had previously remarked, "The combination of the Covid-19 pandemic, sustained industry headwinds, higher interest rates, and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders."