Current:Home > Markets'A great day for Red Lobster': Company exiting bankruptcy, will operate 544 locations-DB Wealth Institute B2 Expert Reviews
'A great day for Red Lobster': Company exiting bankruptcy, will operate 544 locations
View Date:2024-12-23 18:40:53
Red Lobster is exiting Chapter 11 bankruptcy after a federal judge on Thursday approved the seafood restaurant chain's plan to rebound from an "endless shrimp" fiasco, massive debt, dozens of location closures and an overall decline in guests.
As part of Red Lobster's Chapter 11 plan, RL Investor Holdings LLC − a newly formed entity organized and controlled by Fortress Investment Group LLC − will acquire the restaurant chain. The acquisition is expected to be completed by the end of the month, Red Lobster said in a news release.
Red Lobster will be Fortress' most recent acquisition of a company that has filed for bankruptcy, following the purchases of Vice Media and the Alamo Drafthouse, which has since been sold to Sony Pictures Entertainment.
Fortress also controls a company called SPB Hospitality, which owns brands such as Logan's Roadhouse, Krystal, Old Chicago Pizza & Taproom and Twisted Tenders, spokesperson Gordon Runté said.
"It's definitely an area where we have a lot of experience," Runté told USA TODAY about acquiring another struggling restaurant. "Red Lobster is a big undertaking, it is 500-plus locations, but we're excited about the prospects for the restaurant."
'This is a great day for Red Lobster'
Once the acquisition is complete, Damola Adamolekun will become the CEO of the Red Lobster restaurant chain and take over for former CEO Jonathan Tibus, who will step down from the role and leave the company. Adamolekun was formerly CEO of P. F. Chang's.
"This is a great day for Red Lobster," Adamolekun said. "With our new backers, we have a comprehensive and long-term investment plan – including a commitment of more than $60 million in new funding – that will help to reinvigorate the iconic brand while keeping the best of its history."
"Red Lobster has a tremendous future, and I cannot wait to get started on our plan with the company's more than 30,000 team members across the USA and Canada," he said.
Following the court's approval, Red Lobster will continue to operate as an independent company and maintain 544 locations across 44 U.S. states and four Canadian provinces, the company said.
"I'm proud of what Red Lobster has achieved during this restructuring – the Company will emerge from Chapter 11 stronger financially and operationally, and with new backers who are resolutely focused on investment and growth, " Jonathan Tibus said in the release.
Red Lobster closed 23 locations last week
Red Lobster recently closed 23 more restaurants across the nation.
The recent restaurant closures brought the total closures to at least 129 across the U.S. The most recent wave included three locations in Florida, Illinois and Virginia; two in Minnesota and New York; and one in each of the following states: Arizona, California, Colorado, Georgia, Indiana, Missouri, North Carolina, Ohio, and South Carolina.
Why did Red Lobster file for Chapter 11 bankruptcy?
Red Lobster filed for bankruptcy on May 19 after closing dozens of locations and announcing that the chain intended to "drive operational improvements" by simplifying the business. Documents later filed in the Middle District of Florida revealed that the bankruptcy was due to significant debt, a carousel of CEOs, an all-you-can-eat shrimp debacle and a 30% drop in guests since 2019.
"Recently, the debtors have faced a number of financial and operational challenges, including a difficult macroeconomic environment, a bloated and underperforming restaurant footprint, failed or ill-advised strategic initiatives, and increased competition within the restaurant industry," Tibus said in the bankruptcy documents.
Tibus, who was serving as Red Lobster's chief revenue officer on Jan. 11, before being named CEO, said in the documents that "it was immediately clear that Red Lobster's performance was deteriorating and had been doing so for several years."
Contributing: Natalie Neysa Alund and Gabe Hauari/ USA TODAY
veryGood! (23)
Related
- Wicked's Ethan Slater Shares How Ariana Grande and Cynthia Erivo Set the Tone on Set
- Florence Pugh's Completely Sheer Gown Will Inspire You to Free the Nipple
- Today’s Al Roker Is a Grandpa, Daughter Courtney Welcomes First Baby With Wesley Laga
- Tucker Carlson says he'll take his show to Twitter
- Stop What You're Doing—Moo Deng Just Dropped Her First Single
- Gen Z workers are exhausted — and seeking solutions
- Ford reverses course and decides to keep AM radio on its vehicles
- The Botanic Matchmakers that Could Save Our Food Supply
- Best fits for Corbin Burnes: 6 teams that could match up with Cy Young winner
- Vice Media, once worth $5.7 billion, files for bankruptcy
Ranking
- Justine Bateman feels like she can breathe again in 'new era' after Trump win
- Warming Trends: Bill Nye’s New Focus on Climate Change, Bottled Water as a Social Lens and the Coming End of Blacktop
- China Ramps Up Coal Power to Boost Post-Lockdown Growth
- New Faces on a Vital National Commission Could Help Speed a Clean Energy Transition
- Suicides in the US military increased in 2023, continuing a long-term trend
- The 15 Best Sweat-Proof Beauty Products To Help You Beat the Heat This Summer
- Adidas finally has a plan for its stockpile of Yeezy shoes
- Out in the Fields, Contemplating Humanity and a Parched Almond Farm
Recommendation
-
Kim Kardashian and Kourtney Kardashian Team Up for SKIMS Collab With Dolce & Gabbana After Feud
-
Can YOU solve the debt crisis?
-
The Day of Two Noons (Classic)
-
Progress in Baby Steps: Westside Atlanta Lead Cleanup Slowly Earns Trust With Help From Local Institutions
-
Get $103 Worth of Tatcha Skincare for $43.98 + 70% Off Flash Deals on Elemis, Josie Maran & More
-
Sarah Ferguson, Duchess of York, Shares Update After Undergoing Surgery for Breast Cancer
-
Biden’s Been in Office for More Than 500 Days. He Still Hasn’t Appointed a Top Official to Oversee Coal Mine Reclamation
-
Warming Trends: Heat Indexes Soar, a Beloved Walrus is Euthanized in Norway, and Buildings Designed To Go Net-Zero