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After months of dozens of restaurant closings and headlines about \u201cendless shrimp\u201d woes, Red Lobster is poised to soon exit from Chapter 11 bankruptcy protection.<\/p>\n
A U.S. bankruptcy judge on Thursday approved the casual seafood chain\u2019s reorganization plan and sale to a lender group led by asset manager Fortress. The green light arrives under just four months after Red Lobster filed for bankruptcy protection as it pursued a sale, following years of mounting losses and dwindling customers while it struggled to keep up with competitors.<\/p>\n
At the time of filing in May, Red Lobster\u2019s leadership shared plans to \u201csimplify the business\u201d through a reduction of locations. The Orlando, Florida, chain shuttered dozens of its North American restaurants in recent months \u2014 both leading up to and during the bankruptcy process. That includes\u00a0more than 50 locations<\/a>\u00a0whose equipment was put up for auction just days before the Chapter 11 petition, followed by dozens of additional closures throughout the bankruptcy process.<\/p>\n Red Lobster said Thursday that it expects to operate about 544 locations across the U.S. and Canada upon emerging from bankruptcy. That\u2019s down from 578 disclosed as of May\u2019s filing.<\/p>\n Under terms of the acquisition, which is expected to close at the end of September, the chain will continue to operate as an independent company.<\/p>\n The chain will also get a new CEO \u2014 Damola Adamolekun, former chief executive of P.F. Chang\u2019s.<\/p>\n Adamolekun was appointed to head RL Investor<\/a> Holdings, the newly formed entity acquiring Red Lobster, by Fortress last week. In a statement Thursday, Adamolekun said that Red Lobster \u201chas a tremendous future\u201d and thanked Jonathan Tibus, who will leave the company and step down as CEO, for his leadership during the bankruptcy process.<\/p>\n Red Lobster\u2019s purchaser is also providing additional funding to help the Orlando, Florida-based chain get back on its feet post-emergence. Adamolekun said the company\u2019s long-term investment plan includes a commitment of more than $60 million in new funding.<\/p>\n Red Lobster has seen multiple ownership changes over the course of its 56-year history. The chain was founded back in 1968 by Bill Darden, who sold Red Lobster to General Mills<\/a> in 1970. General Mills later went on to form Darden Restaurants<\/a>, which owns Olive Garden and other chains. Darden Restaurants<\/a> was spun off from General Mills in 1995.<\/p>\n Darden Restaurants later sold Red Lobster to a private equity firm in 2014.\u00a0Thai Union Group<\/a>, one of the world\u2019s largest seafood suppliers, first\u00a0invested in Red Lobster in 2016<\/a>\u00a0and upped its stake in 2020 \u2014 but announced its intention to exit its minority investment earlier this year.<\/p>\n When announcing plans to divest in January, CEO Thiraphong Chansiri said the COVID-19 pandemic, industry headwinds and rising operating costs from Red Lobster had resulted in \u201cprolonged negative financial contributions to Thai Union and its shareholders.\u201d It reported a $19 million loss from Red Lobster for the first nine months of 2023.<\/p>\n While not the sole reason, among sources of loss were \u2014 yes \u2014 those endless shrimp. Last year, Red Lobster significantly expanded the iconic all-you-can-eat special. But customer demand overwhelmed what the chain could afford. Thai Union leadership later noted that the deal\u2019s $20 price tag wasn\u2019t making enough money.<\/p>\n<\/div>\nRecommended reading:<\/strong>
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