Red Lobster, the seafood chain which suddenly closed dozens of restaurants across the United States, is expected to file for bankruptcy as early as next week, according to the Wall Street Journal.
People familiar with the plans told the newspaper on late Tuesday that the company is preparing to file a Chapter 11 bankruptcy petition in Orlando, Florida, before Memorial Day next week.
As part of this process, the company plans to negotiate concessions from landlords and strike deals with creditors in an effort to continue operating. It’s still unclear how restaurants and employees would be affected.
On Monday, liquidation firm TAGeX Brands revealed that 48 restaurants across 21 states had been shut down. All furniture and equipment at those locations will be sold at an online auction this week.
Company executives have yet to comment on the closures.
Seafood conglomerate Thai Union Group, the company’s largest shareholder, said on an earnings call in February that it would no longer invest in Red Lobster. “We’re going to exit,” Thai Union Group CEO Thiraphong Chansiri said.
Executives at Thai Union Group have blamed the restaurant’s all-you-can-eat shrimp special for accelerating the company’s downward spiral. Although the $20 deal lured in new customers, many took it as a challenge to eat as much as possible, effectively eating into the restaurant’s very thin profit margin.
Red Lobster reported $2.2 billion in domestic business last year, down 8% from 2022, according to research firm Technomic. The chain had roughly 650 restaurants across the U.S. before 48 of them were abruptly closed.
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