The News Journal Media Group’s Post

Red Lobster has filed for Chapter 11 bankruptcy protection, and it’s a move that offers a few lessons. First, Red Lobster is far from the only restaurant that struggled during and after the pandemic. But it’s worth noting that many of the brand’s current woes are unrelated to the pandemic. Sharing the blame is an always-on LTO that drove lots of traffic without much profit. In May 2023 turned its limited time endless shrimp offer into an ALL THE TIME endless shrimp offer. The result? A loss leader that lived up to its name and resulted in plenty of vanishing profits for the seafood brand. For now, Red Lobster is taking steps to stay afloat. We, among many other Americans, are rooting for them -- mainly because we can’t imagine life without those Cheddar Bay Biscuits. Read more: https://bit.ly/3WNBG8u

Overall, U.S. corporate bankruptcy filings reached a 13-year peak last year. It has been a busy two years for bankruptcy courts handling restaurant filings. Rubio’s filed for Chapter 11 protection earlier this month, on the heels of Red Lobster’s filing. Bankruptcy filings have come so far this year from Party Fowl, Boxer Ramen, Tijuana Flats, Sticky Fingers, Oberweis Dairy, and Foxtrot/Dom’s Kitchen. In 2023, Corner Bakery Café filed, as did major franchisees from Burger King, Wendy’s, CKE, Popeyes, Denny’s, and McDonald’s. Bankruptcy filings reached the highest annual total on record for private equity and venture capital-backed companies in the U.S. in 2023, according to S&P Global Market Intelligence data. https://lnkd.in/gJJQbuac

Red Lobster filed for #bankruptcy an early AM [U.S.] report in The Wall Street Journal said. It plans to sell itself to current #lenders. The #Orlando-based #restaurant operator got $100M in #debtor-in-posession #financing commitments. Golden Gate Capital bought the #casualdining seafood chain from multi-concept operator Darden 10 years ago for $2.1B. The #privateequity firm sold half [to be staged at a 10-year interval] of the chain to Thai Union Group PCL. in 2016 for an upfront $575M. It sold its remaining stake to the same buyer four years later. Red Lobster suffered during the #pandemic when both sit-down #dining and commercial #fishing plunged. The #chain had about 650 locations at last count and recently closed dozens of sites in 20 states. #PublicCompany Darden’s move a decade ago looks prescient of course; a long-time owner selling cd be a #redflag. I recall it had then gone under new execs and was trying to focus on its higher-end chains. On that score, Red Lobster was costlier without being worth it. Darden still owns Olive Garden, e.g., which is the reverse — moderate but can feel like family abundance or even [relatively] snooty, with the grated cheese and whatnot, plus the value, via the endless soup and salad. My town has locations of each. Can’t escape from the lobstah for less than $30+, and it’s tumbleweeds in there. The OG is $20, and it’s packed. People considering lobster and scampi are prolly willing to splurge — go to truly high-end — rather than an ersatz chain. “Several restaurant #chains have recently declared bankruptcy or are seeking a sale. Higher #finance costs, slower #consumer #spending and declining #investor interest in #food #investments have hurt restaurants’ #balancesheets, filings and restaurant executives showed,” the Journal said.

I've always been fascinated by Red Lobster. It's an interesting brand that culturally separates those who have less discretionary income and those who have more. For some, Red Lobster is the fanciest and most expensive restaurant in town (or a few towns over). It's the place your prom date takes you if you're one of the "rich kids." It's the place you share big family news or celebrate a milestone birthday. You get the check, get a lump in your throat, start to immediately cut back on other weekly expenses in your mind, and walk out feeling pretty doggone bougie. For others, it's a low-brow chain that doesn't serve "real seafood." It's a place you've visited once... or never. You make fun of it with family or friends as you nurse a great bowl of chowder and wait for your lobster salad at a locally owned seafood restaurant along the coast. You chuckle about how you'd never eat seafood at a Red Lobster in [fill in the blank landlocked city or state]. For you, it's the Chuck E. Cheese of seafood - a crowded weedend mess that surely peddles frozen seafood. [If you're ever unclear on someone's upbringing or food values, ask them what they think of Red Lobster. It's a brand conversation that will tell you a lot about a person.] Though it makes me sad, I'm not totally suprised the brand is suffering the same fate as ToysRUs, RiteAid, Bed Bath & Beyond, etc. What's the viable business model when you're a high-priced, special occasion option for some and a hard-no for others? (Especially when shady buy-outs are happening behind the scenes.) Early RIP, Red Lobster. As I iron my funeral dress, I will begin the search for black market Cheddar Bay Biscuits. :)

Seafood restaurant chain Red Lobster has filed for Chapter 11 bankruptcy in Florida, the company said in a statement Sunday night. This means Red Lobster is closing 91 of its locations. According to the company, it intends to use the proceedings to "drive operational improvements, simplify the business through a reduction in locations, and pursue a sale of substantially all of its assets." Red Lobster stated three reasons for bankruptcy: 1) mismanagement 2) competition and 3) inflation. Which two out of the three factors are in Red Lobster’s control. 1) mismanagement: You can make the decision to manage prudently and eliminate poor managers. 2) competition: you can benchmark yourselves against your major competitors and make a decision to offer your customers better options than your competitors. These factors have been known to offset inflation. These two factors were in Red Lobster’s control and they are fundamental to every stable business enterprise.

Red Lobster, on the brink of seeking bankruptcy protection has been recently blaming its downfall on an ill fated “all you can eat shrimp” promotion, but its troubles go deeper than that, maybe even to its real estate. Back in 1995, Red Lobster’s owner, General Mills sold off the chain along with the rest of its restaurant division, which also included Olive Garden, as Darden Restaurants. But in 2014, amid flagging sales and pressure from investors, Darden sold Red Lobster for $2.1 billion to Golden Gate Capital, a San Francisco private-equity firm. That’s when the problems began. You see, to raise enough cash to buy the lucrative seafood chain, Golden Gate sold off Red Lobster's real estate to another entity — American Realty Capital Properties — and then immediately leased the restaurants back. As soon as they sell the real estate, the private-equity company is made whole, but the restaurant chain is now saddled with added rent indefinitely. It gets more complicated but as Red Lobster continued its downward trend over the next decade, few will remember how the economics have changed for Red Lobster from its heyday. Some will say Red Lobster is no longer in vogue, that consumer tastes have changed but we know better.

TGI Friday’s filed for Chapter 11 bankruptcy on Saturday, joining a growing list of restaurant chains like BurgerFi, Rubio’s, and Buca di Beppo that are navigating financial distress in today’s challenging fast-casual market. Chapter 11 can provide the company with certain benefits as it navigates a restructuring, particularly by allowing the company to reject or renegotiate legacy leases and contracts. Removing this financial burden may be key as the company solicits bids for its assets and enters into discussions with potential buyers down the road. For now, TGIF is focused on sustaining its operations and at its first bankruptcy hearing on Monday, the company received interim approval for a $23.9 million financing package from Texas Partners Bank, giving it the liquidity it needs to support a 60-day sale process for its assets. I recently shared my thoughts on the restructuring with Seafood Source- read more here: https://lnkd.in/gif23npb Debtwire subscribers can follow our latest legal analysis on the bankruptcy hearings here https://lnkd.in/g59C4-qG

Restaurant chain Buca di Beppo, with 44 locations in 14 states, filed for chapter 11 bankruptcy reporting at least $15MM to $50MM owed to 30 creditors and citing declining sales, rising costs, continued staffing challenges and changes in consumer preferences as its reason to reorganize. https://lnkd.in/gP-MPNCp #bankruptcy #landlords #retail #chapter11 #chapter7 #reorganization #creditorsrights #debtorcreditorsrights #landlordtenants #ceosanddirectors #ceosandofficers #officersanddirectors

"Red Lobster, the casual dining chain that won fans with inventions like popcorn shrimp and 'endless' seafood deals, has filed for Chapter 11 bankruptcy protection. The 56-year-old chain made the filing late Sunday, days after shuttering dozens of restaurants. 'This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth,' said Red Lobster CEO Jonathan Tibus, a corporate restructuring expert who took the top post at the chain in March. Red Lobster said it will use the bankruptcy proceedings to simplify its operations, close restaurants and pursue a sale. As part of the filings, Red Lobster has entered into a so-called 'stalking horse' agreement, meaning it plans to sell its business to an entity formed and controlled by its lenders." #finance #corporatefinance #equipmentfinance #equipmentleasing #financialservices #redlobster #foodandbeverage #bankruptcy #chapter11 https://lnkd.in/evs5AzKA