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Bloomberg: Red Lobster Considers Bankruptcy to Deal With Leases and Labor Costs

DrFunk

DrFunk

Member
Oct 25, 2017
11,914
(Bloomberg) -- Seafood restaurant chain Red Lobster is mulling a Chapter 11 bankruptcy filing as it looks to restructure its debt, according to people with knowledge of the matter.

Red Lobster has been getting advice from law firm King & Spalding, said the people, who asked not to be identified discussing a private matter. The dining chain is considering a possible Chapter 11 filing to shed some long-term contracts and renegotiate a swath of leases, the people said.

Red Lobster's cash flows have been weighed down by onerous leases and labor costs, among other issues. Restructuring discussions are ongoing and a final decision hasn't been made, they said. Filing for bankruptcy would allow the company to keep operating while it works on a debt-cutting plan.

Messages left with Red Lobster and King & Spalding were not returned.
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finance.yahoo.com

Red Lobster Considers Bankruptcy to Deal With Leases and Labor Costs

(Bloomberg) -- Seafood restaurant chain Red Lobster is mulling a Chapter 11 bankruptcy filing as it looks to restructure its debt, according to people with knowledge of the matter. Most Read from BloombergUS Yields Spike as Hawkish Powell Puts 5% in Play: Markets WrapDubai Grinds to Standstill...
finance.yahoo.com finance.yahoo.com

When you overdo it with the endless shrimp:
x6RCpfsDYh3LyyeJ7QSAROL0Qa4=.gif
 
Dopply

Dopply

Member
Nov 27, 2020
122
It's a shame because I really did like Red Lobster, but they are absolutely insane if they think anyone is going to pay their current menu prices. It's like they forgot they were a chain restaurant or something.
 
Mango Pilot

Mango Pilot

Member
Apr 8, 2024
311
Dopply said:
It's a shame because I really did like Red Lobster, but they are absolutely insane if they think anyone is going to pay their current menu prices. It's like they forgot they were a chain restaurant or something.
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They're not going anywhere. Chapter 11 is a reorganization of their debt. Not chapter 7, which is a liquidation.
 
entremet

entremet

You wouldn't toast a NES cartridge
Member
Oct 26, 2017
60,279
I doubt these type of chains are doing well. Not surprised.
 
PeakPointMatrix

PeakPointMatrix

Member
Oct 25, 2017
19,132
Please god as long as the biscuits survive.

I stopped eating there as soon as I saw that most meals have like 2000+mg of sodium and I really liked this whole being alive thing.
 
fragamemnon

fragamemnon

Member
Nov 30, 2017
6,865
Just feels like there's not a good market fit for them anymore. Sort of get why you'd go into bankruptcy to try to sort out how to extract value from the company's brand and products, but I just don't see any way their model is relevant in post-COVID American life.
 
Mango Pilot

Mango Pilot

Member
Apr 8, 2024
311
PeakPointMatrix said:
Please god as long as the biscuits survive.

I stopped eating there as soon as I saw that most meals have like 2000+mg of sodium and I really liked this whole being alive thing.
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Welcome to every chain restaurant in America.

fragamemnon said:
Just feels like there's not a good market fit for them anymore. Sort of get why you'd go into bankruptcy to try to sort out how to extract value from the company's brand and products, but I just don't see any way their model is relevant in post-COVID American life.
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Did people stop wanting to eat out post covid?
 
Dopply

Dopply

Member
Nov 27, 2020
122
Mango Pilot said:
They're not going anywhere. Chapter 11 is a reorganization of their debt. Not chapter 7, which is a liquidation.
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Oh I know, I mean that I don't eat there anymore and haven't for a while (and probably won't again, for the reasons I listed...if I'm spending $50 on an entree, it's not going to be at a Red Lobster).
 
Neece

Neece

Member
Oct 27, 2017
9,203
My mom likes going there. She was appalled when I took her there a year or 2 ago and found out salads no longer come with the entre.
 
Vagabond

Vagabond

Member
Oct 26, 2017
3,332
United States
You know, one thing I'll always take from Red Lobster's business strategy is that they actually had seafood boil bags before they became popularized. My friend circle went to Red Lobster in Miami almost every other day on our vacation because they were that good and cheap (back in college) but when we returned home the restaurants there had no idea what we were talking about.

Now there's like 5 seafood boil places for every Red Lobster. Why didn't they make it a national thing?
 
L Thammy

L Thammy

Spacenoid
Member
Oct 25, 2017
50,109
I found a recipe to imitate the biscuits. It's not as good as the real ones, but it's somehow better than the instructions the biscuit mix gives you, anyway.
 
PeakPointMatrix

PeakPointMatrix

Member
Oct 25, 2017
19,132
Mango Pilot said:
Welcome to every chain restaurant in America.
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I mean yeah most chain meals are salt bombs, but Red Lobster has made some kind of breakthrough on a sodium-per-oz basis. Some entrees have over 4000mg in there!! You eat a salad+soup+entree and you're talking about 3 days worth of sodium in one sitting. There's chain restaurant salt levels, and then there's Red Lobster levels.
 
sugar bear

sugar bear

Member
Oct 27, 2017
1,649
Had too much to drink at the Red Lobster
Now the room is spinning around like the blades of a helicopter
 
Mango Pilot

Mango Pilot

Member
Apr 8, 2024
311
PeakPointMatrix said:
I mean yeah most chain meals are salt bombs, but Red Lobster has made some kind of breakthrough on a sodium-per-oz basis. Some entrees have over 4000mg in there!! You eat a salad+soup+entree and you're talking about 3 days worth of sodium in one sitting. There's chain restaurant salt levels, and then there's Red Lobster levels.
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Well, their food mostly lives in salt water.
 
skeezx

skeezx

Member
Oct 27, 2017
20,196
fragamemnon said:
Hasn't there been a huge swing towards drive through/take out? LIke if you're going to go out and sit down, you need to clear a higher bar than Red Lobster does, and the cost of eating there with higher prices post-COVID torpedoes family outings.
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as somebody who grew up in the 90s that's kind of the thing Red Lobster was seen as the higher end chain opposed to something like, say, Chili's or Outback Steakhouse. like, nobody was dumb enough to think it was 5 star michelin dining but it was where you went to splurge a bit but that customer tier doesn't particularly exist anymore
 
Fat4all

Fat4all

Woke up, got a money tag, swears a lot
Member
Oct 25, 2017
93,119
here
my only issue with red lobster is honestly the lobster

for a restaurant likely nowhere near the ocean its fine, but they've gotten more and more overpriced for generally small and not so great lobster

prices kept going up generally, as well

20 bucks for a plate of pasta and shrimp just aint realistic for me
 
thewienke

thewienke

Member
Oct 25, 2017
16,005
Seafood is substantially more expensive than other meals if sold at a price that's sustainable for the business so I'm not surprised about that.

Over the years Red Lobster has turned into the Applebees of seafood (Applebees used to be better too). It's in the same bucket as Chilis and Olive Garden. I'd rather just hit up local joints even if a lot of them are a bit formulaic too.
 
Fat4all

Fat4all

Woke up, got a money tag, swears a lot
Member
Oct 25, 2017
93,119
here
thewienke said:
Seafood is substantially more expensive than other meals if sold at a price that's sustainable for the business so I'm not surprised about that.

Over the years Red Lobster has turned into the Applebees of seafood (Applebees used to be better too). It's in the same bucket as Chilis and Olive Garden. I'd rather just hit up local joints even if a lot of them are a bit formulaic too.
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all the places cut corners too much over time, and its a place that sells food, and unshockingly it reflects in the quality of the food lol

feels like the chains kinda doomed themselves by expanding too much, thinking their success would last forever
 
Jarrod38

Jarrod38

Member
Oct 25, 2017
12,690
Red Lobster will not be the only one heading for bankruptcy soon or looking to sell.

www.restaurantdive.com

Bob Evans rumored to be up for sale

The chain, which is owned by Golden Gate Capital, had over $800 million in systemwide sales in 2022 and reportedly mulled a sale that year, too.
www.restaurantdive.com www.restaurantdive.com
 
Saito

Saito

Member
Oct 25, 2017
1,811
Chain restaurants saw all the other companies gouging and thought they could get away with it too.
 
Bessy67

Bessy67

Member
Oct 29, 2017
11,661
Unfortunately this is likely going to be happening a lot going forward. I think these restaurants typically have profit margins of 5% or less so rising food, shipping and labor costs as well as consumers not being willing or able to spend more is going to lead to some tough situations.
 
LuigiMario

LuigiMario

Member
Oct 28, 2017
3,940
corporate chain restaurants popularity has been declining since well before COVID (with a few exception) so I think it's more of COVID accelerated a trend thing than COVID killed chains. They just have way too much overhead and there's so much better local competition now I don't really see many surviving unless they are super competitive of price or legit good.
 
scottbeowulf

scottbeowulf

Member
Oct 27, 2017
9,397
United States
You know your seafood restaurant is in trouble when people only care about your biscuits, that can easily be made at home. They should transition to grocery items like the biscuits or scampi mix, cocktail sauce etc. Cuz there's zero chance the restaurant will survive. It's a relic.
 
Shadow of the Void

Shadow of the Void

Member
Feb 9, 2018
2,640
I don't go out to eat as often as I used to since I was in debt for most of the past year and a half and money has been really tight, but Red Lobster was always one of my favorite places to go. Hopefully they survive this debt restructuring.
 
TheKeipatzy

TheKeipatzy

Member
Oct 30, 2017
2,746
California for now
Nastiest restaurant I've ever been to didn't have that pleasure of ever eating there but between the server acting like an absolute dick to me for not wanting a lobster or seafood I'm glad I just walked out.

On the other time I've been there was when I've been picking up orders and the people never tip but don't worry they'll get $300 with food. Eventually...
 
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