Bankrupt Red Lobster Is Getting a Second Chance With Hopeful New Owners
Red Lobster's recent announcement that it had filed for Chapter 11 bankruptcy sparked plenty of alarm among fans, as many wondered what would become of the seafood chain and its beloved Cheddar Bay Biscuits. But in good news for these devotees, Red Lobster is getting a second chance thanks to a new owner that has stepped forward to buy it out of bankruptcy.
Following weeks of reports about a potential bankruptcy, Red Lobster officially announced the Chapter 11 filing on May 19. The move was the culmination of a series of financial woes for the seafood chain, which has struggled in recent years with high food and labor costs and significant operating losses, especially during its now infamous Ultimate Endless Shrimp promotion in 2023. Red Lobster has also been shuttering underperforming locations for years and closed nearly 100 restaurants just days before it declared bankruptcy.
When announcing the bankruptcy, Red Lobster said that it would continue operations at its remaining locations as it began looking for a buyer.
"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," CEO Jonathan Tibus said in a statement at the time. "The support we've received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests."
In the two months since then, the lender Fortress Investment Group was the only buyer to come forward to acquire Red Lobster from bankruptcy before the deadline for bids passed, Restaurant Business Magazine reported. Fortress was the stalking horse bidder (the first entity to place a bid in a bankruptcy case) for the seafood chain and set a starting price of about $375 million. A court hearing to approve the sale will take place on July 29.
Though May bankruptcy filings indicated that nearly 100 additional Red Lobster locations were at risk of closing if they failed to renegotiate their leases, attorney Brad Sandler said that the Fortress sale should allow the chain to continue normal operations and avoid more closures, per Restaurant Business Magazine.
Fortress will also bring some notable restaurant experience to the table since it owns SPB Hospitality, the parent company of 13 other chains that were also bought out of bankruptcy. Other brands under the SPB Hospitality umbrella right now include the slider chain Krystal, Logan's Roadhouse, Old Chicago Pizza, and Twisted Tenders.
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