Red Lobster, a popular seafood restaurant chain, has recently filed for Chapter 11 bankruptcy in the United States, citing liabilities of over US$10 billion. This move has raised concerns about the future of the company and its operations, including those in Canada.
The chain, which currently operates 551 locations in the U.S., 27 in Canada, and 27 internationally, has faced challenges such as rising costs, significant rent obligations, and high labor costs. Court documents reveal that Red Lobster has been struggling financially, with a net loss of US$76 million in the fiscal year 2023.
One of the factors contributing to the chain’s downfall is the decline in overall sales, attributed to factors like inflation and rising operating costs. Additionally, the company’s popular “Ultimate Endless Shrimp” promotion, which allowed customers to eat unlimited shrimp for a fixed price, has also impacted its finances.
The bankruptcy filing will allow Red Lobster to continue operating while it works on a plan to repay its creditors. The company plans to hand control to its lenders, led by the New York City-based Fortress Investment Group.
In Canada, Red Lobster has 27 locations, primarily in Ontario, with additional locations in Alberta, Saskatchewan, and Manitoba. The chain employs 2,000 Canadians and owns two properties in Ontario. The company has not provided specific details about its future in Canada but has stated its intention to sell all of its assets, including those in the country.
As the bankruptcy proceedings unfold, Red Lobster has expressed its commitment to continue operating, but the fate of its Canadian restaurants remains uncertain. With the closure of several locations in the U.S. and the auctioning of kitchen equipment, the future of Red Lobster in Canada hangs in the balance.
The seafood chain’s struggles highlight the challenges faced by the restaurant industry, particularly in the wake of the COVID-19 pandemic. The impact of Red Lobster’s bankruptcy filing on its Canadian operations and employees remains to be seen as the company navigates through this challenging period.