Seafood chain Red Lobster files for bankruptcy
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Red Lobster, a seafood restaurant that helped define upscale casual dining for the middle class, filed for Chapter 11 protection.
Why it matters: It's one of the largest restaurant bankruptcies in recent years.
Zoom in: The Chapter 11 filing includes a stalking-horse agreement that sees the company selling its business to an entity formed and controlled by its existing term lenders, per The Wall Street Journal.
- The company will also receive $100 million in debtor-in-possession financing from its existing lenders.
- "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," CEO Jonathan Tibus said in a statement.
By the numbers: Red Lobster said its estimated liabilities were between $1 billion to $10 billion, per its bankruptcy filing.
Catch up quick: Even before the filing in Florida, Red Lobster had to close dozens of locations and lay off hundreds of employees.
- The pandemic and inflation tied to rising food and labor costs compounded Red Lobster's challenges.
The big picture: Casual dining as a subsector fared poorly last year, beat out by fast food, fast casual and family dining.
Flashback: Red Lobster was founded in 1968 by restaurant legend Bill Darden, the namesake for Darden Restaurants.
- In 1970 it attracted financial backing from food conglomerate General Mills, enabling it to expand nationwide.
- It would go on to introduce popcorn shrimp in 1974, Lobsterfest in 1984 and Cheddar Bay Biscuits in 1992.
- In 1995, General Mills spun off its restaurant holdings as a publicly traded company under the name Darden Restaurants.
Darden Restaurants sold Red Lobster in 2014 to private equity firm Golden Gate Capital for $2.1 billion.
- Golden Gate parted with its remaining stake in the chain in 2020, selling to Thai Union Group.
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