Red Lobster may potentially file for bankruptcy by Memorial Day, according to WSJ

Red Lobster, the popular seafood chain, is facing financial difficulties that may lead to filing for Chapter 11 bankruptcy protection, according to reports from The Wall Street Journal. The chain, burdened with hundreds of millions in debt, recently closed 52 of its stores across the US, as confirmed by restaurant liquidator TAGeX Brands.

This news comes after Red Lobster’s struggles with financial troubles in recent years. Factors such as high leasing costs, reduced foot traffic during COVID-19 lockdowns, and a failed all-you-can-eat shrimp promotion have contributed to the company’s downfall. The promotion, in particular, was cited as a key reason for the chain’s financial struggles.

Thai Union Group, which had majority ownership of Red Lobster, made the decision to pull out its investments in the chain due to these financial challenges. On a February earnings call, Thai Union CEO Thiraphong Chansiri stated that they would not be injecting any more money into Red Lobster.

Chansiri attributed the company’s financial struggles to a combination of factors including the COVID-19 pandemic, industry challenges, higher interest rates, and rising material and labor costs. These issues have resulted in prolonged negative financial contributions to Thai Union and its shareholders.

Red Lobster and Thai Union Group have not yet commented on the reports of potential bankruptcy. The chain currently operates around 650 locations, and closures have been confirmed in states including California, Colorado, Florida, New York, and Texas.

As the situation unfolds, it remains to be seen how Red Lobster will navigate these financial challenges and what the future holds for this iconic seafood chain.

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