Red Lobster nearing deal with new owner
New York (CNN) — Two months after filing for bankruptcy, Red Lobster is close to emerging with a new owner.
Red Lobster said last week in a court filing that it will accept an existing sale offer from Fortress Credit Corp., a lender experienced in restaurant management, after the seafood chain did not receive any other acquisition bids. A hearing has been set for this week for a judge to approve the sale.
Fortress is one of Red Lobster’s largest lenders and has financed the restaurant chain’s operations, including a new $100 million loan that allowed Red Lobster to stay afloat during its bankruptcy proceedings. Fortress is an investment fund and owns restaurant chains such as Krystal, Logan’s Roadhouse and J. Alexander’s through a hospitality arm of the fund.
Red Lobster has closed around 100 restaurants in recent months, including five restaurants in Indiana, and has said it wants to close several dozen more locations. It has around 600 restaurants remaining.
Mismanagement, competition, inflation and other factors brought down Red Lobster, which has been a pioneer in the restaurant industry. Thai Union, a global seafood supplier, became Red Lobster’s leading shareholder in 2020.
Under Thai Union’s leadership, Red Lobster’s culture turned toxic, former leaders told CNN. Red Lobster cut costs, removed longtime suppliers and implemented strategies that backfired, such as making $20 endless shrimp a permanent menu item. Red Lobster lost $11 million on the endless shrimp deal.
Red Lobster said in its bankruptcy filing that it was investigating the decision made under Thai Union to implement the endless shrimp promo and whether it was improperly done to drive more business to Thai Union. (Thai Union has previously called the accusations “meritless.”)
Thai Union in January announced its intention to divest from Red Lobster and took a $530 million loss on its investment.