“If they wanted to, they would,” is an old saying about determination, and one American seafood chain took this quote seriously when it seemed like the end was near.
This nostalgic restaurant devised a successful restructuring plan to avoid letting a financial mishap ruin its over five-and-a-half decades-long cheddar biscuits and endless shrimp empire overnight.
Related: Nostalgic seafood restaurant chain exits Chapter 11 bankruptcy
The plan paid off, and on Monday, the seafood chain successfully exited Chapter 11 bankruptcy protection less than four months after filing and only around 11 days after receiving approval for its strategic restructuring plan.
Middle-class American families can continue enjoying seafood at affordable prices without having to worry about the future of their favorite dependable seafood restaurant.
Red Lobster is looking to turn things around after a tumultuous year.
Red Lobster and its history with bankruptcy
Red Lobster filed for bankruptcy protection in May with a total debt of nearly $300 million.
However, the seafood restaurant refused to give up on its belief in the brand and announced that it would remain open and continue operating during the Chapter 11 process.
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To proceed with operations as normal, the restaurant received a $100 million debtor-in-possession (DIP) financing commitment from its existing lenders.
“This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth. 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,” said former Red Lobster CEO Jonathan Tibus in the announcement.
A deliciously dangerous endless shrimp disaster
To acquire more loyal customers and hopefully increase daily traffic within its various locations, the restaurant began offering $20 all-you-can-eat shrimp.
In June 2023, the company announced that its Ultimate Endless Shrimp promotion would be “all day, every day.”
However, the deal was way too good to be true. By November, Red Lobster reported a $11 million quarterly loss that the company mainly attributed to the suddenly infamous endless shrimp deal.
The loss of so much profit left Red Lobster no other option but to file for Chapter 11 bankruptcy to potentially exit this unprecedented real-life nightmare.
Red Lobster devises Chapter 11 plan to succeed with new owner
On Sept. 5, Red Lobster announced that it had received court approval for its restructuring plan to exit its Chapter 11 filing effectively.
In this plan, which was later proven successful, the investment group RL Investor Holdings LLC would acquire Red Lobster by the end of this month, becoming the new owner of the seafood chain.
Additionally, a major role transition would take place in which Red Lobster’s CEO at the time, Jonathan Tibus, would be replaced by former P.F. Chang’s CEO Damola Adamolekun.
These drastic changes were all in an effort to successfully return to the restaurant business and confront the growing competition amid an unpredictable, ever-evolving economy.
“Red Lobster is now a stronger, more resilient company, and today is the start of a new chapter in our history,” said Red Lobster’s new CEO, Damola Adamolekun, in an announcement.
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Red Lobster now has 545 restaurants across 44 U.S. states and four Canadian Provinces.
“As part of our new ownership structure, we have backers who have a history of making successful investments in restaurants. Our comprehensive and long-term investment plan for Red Lobster includes a commitment of more than $60 million in new funding which will help us to deliver improvements across every aspect of our company. I’m looking forward to working with our 30,000-strong team to bring our plan to life,” said Adamolekun.
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