After months of dozens of restaurant closings and headlines about "endless shrimp" woes, Red Lobster is poised to soon exit from Chapter 11 bankruptcy protection. A US bankruptcy judge on Thursday approved the casual seafood chain's reorganization plan and sale to a lender group led by asset manager Fortress. The green light arrives about four months after Red Lobster filed for bankruptcy protection as it pursued a sale, the AP reports, following years of mounting losses and dwindling customers while it struggled to keep up with competitors.
At the time of filing in May, Red Lobster's leadership shared plans to "simplify the business" through a reduction of locations. The Orlando, Florida, chain shuttered dozens of its North American restaurants in recent months—both leading up to and during the bankruptcy process. That includes more than 50 locations whose equipment was put up for auction just days before the Chapter 11 petition, followed by dozens of additional closures throughout the bankruptcy process. Red Lobster said Thursday that it expects to operate about 544 locations across the US and Canada upon emerging from bankruptcy. That's down from 578 disclosed as of May's filing.
The chain will also get a new CEO—Damola Adamolekun, former chief executive of PF Chang's. Adamolekun was appointed to head RL Investor Holdings, the newly formed entity acquiring Red Lobster, by Fortress last week. In a statement Thursday, Adamolekun said Red Lobster "has a tremendous future." For the first nine months of 2023, a $19 million loss had been reported for Red Lobster. While not the sole reason, among sources of loss indeed were those endless shrimp, per the AP. Last year, Red Lobster significantly expanded the iconic all-you-can-eat special. Customer demand overwhelmed what the chain could afford.
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