- According to the Wall Street Journal, Red Lobster may file for Chapter 11 bankruptcy protection next week.
- The restaurant chain is hundreds of millions of dollars in debt and recently closed 52 locations.
- Red Lobster blamed part of its financial troubles on its all-you-can-eat shrimp promotion.
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Restaurant chain Red Lobster could file for bankruptcy protection as soon as next week. wall street journal It was reported on Tuesday.
The company is hundreds of millions of dollars in debt and plans to file for Chapter 11 bankruptcy in Orlando before Memorial Day, people familiar with the matter told the Journal.
Bloomberg previously reported in April that the restaurant company was considering the application. Chapter 11 Bankruptcy Protection.
The bankruptcy news comes after Red Lobster, which has about 650 stores, closed more than 50 locations across the United States, restaurant liquidator TAGeX Brands confirmed to Business Insider on Monday.
States where Red Lobster will be closed include California, Colorado, Florida, New York and Texas.
The popular seafood chain has been experiencing financial difficulties in recent years.
Red Lobster and outside observers blame lease costs, declining customer traffic during the coronavirus lockdown and a failed all-you-can-eat shrimp promotion in part for the company’s decline.
As a result of these financial difficulties, Thai Union Group, which took over majority ownership of Red Lobster in 2020, withdrew its investment. At an earnings conference in February, Thirapong Chansiri, CEO of the Thai Labor Union, said: “We’re going to exit. We’re not going to inject any more money into Red Lobster.”
Mr Chansiri previously said: “The combination of the COVID-19 pandemic, persistent industry headwinds, rising interest rates, and rising material and labor costs will impact Red Lobster, resulting in a negative impact on the Thai Union and its shareholders. “This resulted in a long-term negative financial contribution to the
Red Lobster and Thai Union Group did not immediately respond to BI’s requests for comment.