Red Lobster considering Chapter 11 bankruptcy, citing losses from “Endless Shrimp”

y_p_w

y_p_w

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Red Lobster May Soon File for Chapter 11 Bankruptcy, Here’s Why

If the Orlando-based seafood restaurant were to seek Chapter 11, it would be one of the most high-profile failures across the chain restaurant world.
www.foodandwine.com www.foodandwine.com

There’s a lot of moving parts here. One is that the [correction] lead minority owner is a Thai seafood company that owns several companies around the world, including Chicken of the Sea and King Oscar. The other is that after losing money with a $20 “Endless Shrimp” special, they were still losing money when they raised the price to $25. They were getting lots of revenue, but I suppose this kind of promotion attracted the kind of customer who would overeat.
 
Last edited:
y_p_w said:
www.foodandwine.com

Red Lobster May Soon File for Chapter 11 Bankruptcy, Here’s Why

If the Orlando-based seafood restaurant were to seek Chapter 11, it would be one of the most high-profile failures across the chain restaurant world.
www.foodandwine.com www.foodandwine.com

There’s a lot of moving parts here.
Click to expand...
Yes- a lot of "fishy stuff"."
This sell/ lease buyback is always an early sign that someone is sucking money out of a company:

As for whether Red Lobster can find a buyer, that remains to be seen. Golden Gate sold much of the company’s real estate in a massive sale-leaseback shortly after its acquisition.

https://www.restaurantbusinessonline.com/financing/red-lobsters-owner-wants-out-business
 
They say they lost $11M on the endless shrimp thing. They have 650 stores. That equates to about $17,000 per store.

The Thai outfit funded Red Lobster to the tune $575M in 2016. They got another round of funding in 2022 for $65M. So the $11M of shrimp may have been the straw that broke the camels back, but not the cause.

Your going to see this a lot going forward, and they will try to blame it on all kinds of things - but here is the reality. When fed funds was zero, and corporate junk debt was maybe 5%, theses companies leveraged up. Now a lot of those bonds are coming due. Normally they would refinance them, however low end of even corporate investment grade debt rates now are 10-15%, some cases more. So they simply can't afford it - they don't generate enough profit to even pay the interest. There called "Zombie" companies, and there are many.

And @GON is completely correct. They loaded it up with debt. They sucked that money back out somehow - possibly giving there other business which happened to sell shrimp a great shrimp contract. And Voila - its like laundering money but its completely legal!.
 
I only go to Red Lobster for one thing. The lightly breaded fried Flounder Filets and the Cheddar Biscuits. They are always crisp never soggy. Usually get a baked potato and a salad. About 4 times a year I go and always on Good Friday as I was born a Catholic. They really suffered around here during the pandemic. Some times the restaurant was only half full with people waiting, usually because of lack of employees.
 
They closed the one here in 2020 I think it was. I miss it we didn’t go there much but I loved the biscuits. They always had to make my dad special biscuits because he is allergic to garlic but me and mom got the good ones. If I remember correctly they were expensive though. They still have one in my work town but I don’t ever go near that end of the town so I haven’t eaten at one since a year or two before they closed ours.
 
gman2304 said:
I haven’t been to a Red Lobster in probably 25 years. I do pass by one on the way to my local mom and pop seafood restaurant!
Click to expand...
I live near Charleston SC. Believe it or not, there is a red lobster here. Obviosly I have never been. Its in a pretty lousy location also - only reason I know its there is its across the street from what used to be the only authentic NY Deli I ever found around here. The deli closed during the pandemic.
 
I never considered Red Lobster as a truly authentic seafood place but hey those biscuits are the best! I also enjoyed their lobster mac and cheese but as for the rest of the food it was, to me, like frozen food quality.
 
I didn't realize Darden sold them off. The food is terrible, haven't eaten there in years but the last time I went the grilled salmon I got was so overcooked it wasn't edible.
 
Hermann said:
I only go to Red Lobster for one thing. The lightly breaded fried Flounder Filets and the Cheddar Biscuits. They are always crisp never soggy. Usually get a baked potato and a salad. About 4 times a year I go and always on Good Friday as I was born a Catholic. They really suffered around here during the pandemic. Some times the restaurant was only half full with people waiting, usually because of lack of employees.
Click to expand...
That is two things.
Actually, four, including the potato and salad.
It does sound good though.
 
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