Red Lobster is reportedly on the brink of bankruptcy due to financial strains. Bloomberg sources say the seafood chain is considering a Chapter 11 filing to renegotiate leases and tackle rising labor costs.
The seafood chain is working with King & Spalding law firm on its restructuring strategy. Although discussions are ongoing, no definitive decisions on bankruptcy have been made yet.
Chapter 11 would allow Red Lobster to keep operating while restructuring its debts. This process aims to secure a more sustainable financial future for the company.
As of now, Red Lobster has not commented on the bankruptcy rumors.
Red Lobster has changed hands several times since its inception in 1968 by Bill Darden and Charley Woodsby. It became part of General Mills in 1970, which expanded the brand across North America.
After over two decades, General Mills spun off Red Lobster into Darden Restaurants, a separate entity. Darden Restaurants later sold the chain to Golden Gate Capital in 2014.
In 2020, Thai Union, which had owned a quarter of Red Lobster, took full ownership from Golden Gate. However, earlier this year, Thai Union decided to divest its stake due to differing financial priorities.
Recently, Red Lobster appointed Jonathan Tibus as CEO. Tibus is renowned for his expertise in turning around struggling companies in the restaurant and retail sectors.