Just months ago, the future of America’s beloved seafood chain, Red Lobster, seemed uncertain. Facing financial challenges, the company shuttered dozens of locations and filed for Chapter 11 bankruptcy protection. But in a dramatic turnaround, Red Lobster has secured court approval for its restructuring plan, paving the way for a promising future. With 544 restaurants saved and a new ownership group on board, the iconic brand is poised for a comeback. Read on to discover the details of Red Lobster’s escape from bankruptcy and how it intends to reinvent itself to ensure a fresh catch for seafood lovers everywhere.
Red Lobster Emerges from Bankruptcy, Secures New Ownership
On September 5th, Red Lobster Management LLC, the company that operates the popular seafood chain, received court approval for its Chapter 11 reorganization plan. As part of this plan, Red Lobster will be acquired by RL Investor Holdings LLC, a new entity formed by funds managed by affiliates of Fortress Investment Group LLC, along with co-investors TCW Private Credit and Blue Torch. The acquisition is expected to be finalized by the end of September.
Leadership Changes
Jonathan Tibus, who served as Red Lobster’s CEO during the reorganization process, will be stepping down from his role. Damola Adamolekun will take over as CEO and will be responsible for leading the company’s turnaround efforts.
“This is a great day for Red Lobster,” said Adamolekun in a press release. “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. I want to thank Jonathan Tibus and his team for their stewardship, and look forward to welcoming them as frequent Red Lobster guests.”
Continued Operations
Following the acquisition, Red Lobster will continue to operate as an independent company with 544 locations spread across 44 U.S. states and four Canadian provinces.
Tibus expressed his satisfaction with Red Lobster’s progress during the restructuring process. “I’m proud of what Red Lobster has achieved during this restructuring,” he said in the press release. “The company will emerge from Chapter 11 stronger financially and operationally, and with new backers who are resolutely focused on investment and growth. I’m incredibly grateful for the support we’ve received from our team members and diners, and from so many of our landlords and vendors throughout this process. I’m looking forward to cheering on Red Lobster as an ardent fan in the years ahead.”
Red Lobster, which first opened its doors in 1968, filed for Chapter 11 bankruptcy protection in May 2024. The company’s emergence from bankruptcy marks a new beginning, as it positions itself for a stronger and more prosperous future.
Flavor Flav’s Advocacy Helps Saved Red Lobster
In a recent interview with Gayle King on her SiriusXM show, Gayle King in the House, rapper Flavor Flav discussed his role in helping Red Lobster navigate its Chapter 11 bankruptcy proceedings.
King, referring to a recent press release from Red Lobster, asked Flav if his efforts had contributed to the company’s progress toward exiting bankruptcy. “I stepped in and tried to help them out because one thing that I could say, Gayle, Red Lobster’s always been one of my favorite family restaurants since back in the 90s,” Flav replied with enthusiasm. “I’ve always been in love with their food, man. And mainly the biscuits. The [cheddar bay] biscuits!”
Flav’s love for Red Lobster came to public attention on June 3rd when he posted a photo on X (formerly Twitter) of himself and two tables full of food from a Red Lobster location. He had ordered the entire menu and shared the meal with his family, expressing his commitment to supporting the restaurant chain and preserving its iconic cheddar bay biscuits. “Ya boy meant it when I said I was gonna do anything and everything to help @redlobster and save the cheddar bay biscuits,” he wrote on the social networking platform at the time.
Ya boy meant it when I said I was gonna do anything and everything to help @redlobster and save the cheddar bay biscuits,,, ordered the whole menu,!!! 👍🏾👍🏾👍🏾 pic.twitter.com/MVBcgHe6VT
— FLAVOR FLAV (@FlavorFlav) June 3, 2024
One month after the viral photo, in recognition of Flav’s efforts, Red Lobster introduced a special off-menu meal called “Flavor Flav’s Faves.” This limited-time offering includes a Maine lobster tail, snow crab legs, garlic shrimp scampi, bacon macaroni and cheese, and the customer’s choice of a side dish.
Red Lobster’s Bankruptcy: A Recipe for Disaster
Red Lobster filed for voluntary Chapter 11 bankruptcy on May 19th, 2024. At the time, the company had over 100,000 creditors and estimated assets between $1 billion and $10 billion, according to the Associated Press.
Several factors contributed to Red Lobster’s financial downfall, including mismanagement, increased competition, declining customer traffic, and rising costs for food and labor. The chain’s financial struggles were evident in recent years, with losses of $33 million in 2022 and continued losses in the third and fourth quarters of 2023.
In an attempt to boost customer traffic after the pandemic, Red Lobster offered a $20 all-you-can-eat shrimp deal. While the company hoped this would serve as a loss leader and attract new customers, customers took full advantage of the offer. One woman even claimed on social media to have eaten 108 shrimp during a single meal.
Kevin Hart, chief sales officer at cash app Upside which works with over 30,000 restaurants, attributed Red Lobster’s bankruptcy to “short-term thinking.” He explained to FOX Business that the company’s decline in foot traffic led to desperate measures to prop up sales. By offering excessive discounts on premium items, Red Lobster eroded its profit margins.
According to Hart, Red Lobster’s failure to develop a “long-term revenue management strategy to attract new customers” ultimately cost it its business. The company’s quick-fix solutions proved to be unsustainable and detrimental to its financial health.