RED LOBSTER EYES CHAPTER 11 BANKRUPTCY, CITES $11 MILLION LOSS FROM 'ENDLESS SHRIMP' PROMOTION

Matt Case - April 17th, 2024 - 9:07am PDT 

RED LOBSTER CONSIDERS BANKRUPTCY TO MANAGE LEASES AND LABOR COSTS

Red Lobster, the well-known restaurant chain, is contemplating a Chapter 11 bankruptcy filing amid financial struggles caused by high costs and poor sales, Bloomberg reported.

The chain, which began in Lakeland, Florida in 1968 and boasts approximately 650 locations nationwide, is known for its signature cheese-flavored biscuits and seafood offerings. According to sources close to the matter, the potential bankruptcy would allow Red Lobster to restructure its debt and possibly renegotiate leases and contracts.

The company's financial woes have been exacerbated by costly leases and high labor expenses. Last year, Red Lobster reported a record $11 million loss, which CFO Ludovic Garnier attributed in part to its "Endless Shrimp" promotion. This deal, which offered unlimited shrimp for $20, proved too generous, leading to higher-than-expected customer turnout, especially after going viral on platforms like TikTok.

Despite the increased foot traffic, which rose by 4 percent following the promotion, the financial outcomes were not as favorable as anticipated. "The rationale was to boost restaurant traffic with the low price point," Garnier explained in November.

Legal advisers from King & Spalding are reportedly assisting with the bankruptcy considerations, though no final decision has been made. The restructuring would potentially enable Red Lobster to keep operating while addressing its financial challenges.