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Red Lobster, the iconic American seafood chain is bailing out something of a sinking ship. According to reports, the restaurant chain is exploring the possibility of filing for Chapter 11 bankruptcy to address mounting financial strain.
The popular “Endless Shrimp” promotion didn’t help matters as it reportedly resulted in an $11 million loss.
Chapter 11 Rescue?
The news comes as Red Lobster grapples with issues like burdensome leases and rising labor costs which are squeezing profit margins. And some industry analysts suggest the brand might be struggling to keep up with changing consumer preferences.
Chapter 11 bankruptcy, would allow Red Lobster to strategically continue operating while it restructures its finances. This could involve renegotiating leases, trimming labor costs, or selling off some underperforming locations.
Troubles In Fast Paradise
Red Lobster isn’t the only restaurant chain navigating the stormy seas. The industry has faced headwinds from rising food costs, a shift towards delivery, and more casual dining experiences. Rotisserie chicken chain, Boston Market is likely facing an extinction event similar to the one that took out the dinosaurs.
A few months ago, the brand had been whittled down to just a few hundred locations after mass closures. As of a few days ago – there’s just 27 locations left. Dozens of lawsuits, and an unpaid debt totaling $11 million, led the chain to file for bankruptcy on December 8th. But they were denied. Attempts to contact Boston Market now come up empty because they no longer have a working email or phone number.
Yes, Red Lobster’s struggles seem particularly acute, and experts are labeling it a “zombie brand” lacking clear direction, but they’re not doing as bad as Boston Market…yet.
The company still has yet to make a final decision on bankruptcy but Red Lobster recently appointed a new CEO who specializes in restaurant turnarounds, and we can only assume he has a plan. So, can Red Lobster weather this bad hand and continue operations? Or will it slip into the waters, Titanic-style, a footnote in fast-casual chain history?
