Red Lobster is poised to emerge from Chapter 11 bankruptcy after a federal judge approved the seafood restaurant chain’s reorganization plan on Thursday.
The approval marks a significant turnaround for the company, which has faced considerable challenges including substantial debt, a series of executive changes, and a decline in customer visits.
As part of the plan, RL Investor Holdings LLC, a newly formed entity backed by Fortress Investment Group LLC, will acquire Red Lobster. The acquisition is slated to be completed by the end of September, according to a company statement. Fortress, which has previously acquired other companies in bankruptcy, including Vice Media and Alamo Drafthouse, will now add Red Lobster to its portfolio.
Fortress Investment Group also controls SPB Hospitality, which owns several restaurant brands such as Logan’s Roadhouse and Krystal. Gordon Runté, a spokesperson for Fortress, expressed optimism about the acquisition, noting the firm’s experience with restaurant management.
“Red Lobster is a big undertaking, but we’re excited about the prospects for the restaurant,” Runté said.
Damola Adamolekun, the former CEO of P.F. Chang’s, will take over as CEO of Red Lobster following the completion of the acquisition. Adamolekun, who will succeed Jonathan Tibus, emphasized the positive outlook for the company.
“This is a great day for Red Lobster… With our new backers, we have a comprehensive and long-term investment plan, including a commitment of more than $60 million in new funding, to reinvigorate the iconic brand,” he said.
Under the new plan, Red Lobster will continue to operate as an independent entity with approximately 544 locations across the United States and Canada. This is a reduction from the 578 locations the chain had at the time of its bankruptcy filing. The chain will also maintain its workforce of over 30,000 employees.
The bankruptcy filing in May was prompted by a combination of financial strains, including high debt levels, a carousel of leadership changes, and a notable drop in customer traffic. Among the issues cited were a poorly received all-you-can-eat shrimp promotion and an overall 30% decline in guest numbers since 2019.
During the bankruptcy process, Red Lobster closed 129 locations nationwide, including 23 in the most recent wave. Despite these closures, the chain is set to emerge from bankruptcy with a renewed focus on operational improvements and financial stability.
Jonathan Tibus, who served as CEO during the bankruptcy proceedings, expressed confidence in the company’s future.
“I’m proud of what Red Lobster has achieved during this restructuring… The company will emerge stronger financially and operationally, with new backers focused on investment and growth,” Tibus said.
As Red Lobster prepares for its new chapter, the acquisition by Fortress Investment Group and the new leadership under Adamolekun signal a strategic effort to stabilize and revitalize the brand moving forward.
USA Today, the Associated Press, and the Daily Mail contributed to this report.
