Red Lobster Files For Bankruptcy, Warns Of More Closures

May 21, 2024

The Red Lobster in Middletown last Tuesday.
Credit: Tom Sofield/LevittownNow.com

Red Lobster has filed for Chapter 11 bankruptcy protection and warned that it will close more locations amid ongoing financial struggles.

Despite the news, the Red Lobster on East Lincoln Highway in Middletown Township remained open as of Monday.

The Middletown Township location was not listed among those Red Lobster seeks to close by breaking their lease, according to court documents reviewed by this news organization.

The seafood restaurant chain operates approximately 570 locations across the U.S. and Canada and employs nearly 36,000 people.

In a statement, the company assured that its restaurants would continue to operate during the bankruptcy process and stated it had a $100 million debtor-in-possession financing commitment from existing lenders.

“Red Lobster’s restaurants will remain open and operating as usual during the Chapter 11 process, continuing to be the world’s largest and most-loved seafood restaurant company,” the statement read.

Red Lobster’s financial woes have been attributed to changing dining habits over the past decade, a sale to a private equity firm, and a 2020 takeover by Thai Union Group, a Bangkok-based canned seafood company.

The bankruptcy documents cite significant financial losses, high operating expenses, deep cuts to the company, an expensive deal to source shrimp exclusively from Thai Union Group, and a costly botched Ultimate Endless Shrimp promotion that resulted in an $11 million loss.

The chain has gone through several CEOs over the past decade and even had a period without a CEO.

Jonathan Tibus, the current CEO, stated that Red Lobster is addressing “several financial and operational challenges and [will] emerge stronger and re-focused on our growth.”

Pennsylvania Attorney General Michelle Henry advised consumers to use their Red Lobster rewards, loyalty points, coupons, and unused gift cards sooner rather than later, as the bankruptcy filing might affect their redemption.

“Consumers who have rewards or loyalty points and unused gift cards should consider using them sooner than later,” Henry said.

Consumers who experience issues redeeming their Red Lobster rewards, loyalty points, coupons, or unused gift cards while their local Red Lobster restaurant is still open for business may call the Office of Attorney General’s Bureau of Consumer Protection at 1-800-441-2555.

Red Lobster started 2024 with 700 locations but has closed many in recent months.

Thai Union Group severed ties with the chain earlier this year and is seeking a buyer, according to trade publication Restaurant Dive.

Red Lobster started with a single Florida location in 1968. It grew over the years and was advertised as the “harbor for seafood lovers” as it expanded across the U.S. and Canada.