The seafood restaurant chain Red Lobster is reportedly exploring the possibility of filing for Chapter 11 bankruptcy protection as a means to alleviate mounting financial pressures and restructure its operations.
According to a report by Bloomberg, citing individuals familiar with the discussions, the company is considering a bankruptcy filing as a strategic move to renegotiate burdensome leases, address long-term contracts, and tackle rising labor costs that have weighed heavily on its bottom line.
While no final decisions have been made, Red Lobster is said to be working with the law firm King & Spalding.
Founded in 1968 by Bill Darden and Charley Woodsby, the chain has been passed between various owners and major investors, including General Mills, Darden Restaurants, and, most recently, Golden Gate Capital and Thai Union.
In 2021, Thai Union, which previously held a one-fourth stake in Red Lobster, acquired Golden Gate Capital’s entire interest in the company. However, earlier this year, Thai Union announced its intention to exit its investment in Red Lobster, citing the restaurant chain’s “ongoing financial requirements no longer align with Thai Union’s capital allocation priorities.”