Red Lobster in Canada: Bankruptcy Proceedings in Ontario Court

Red Lobster Canada, Inc. is facing a tumultuous time as it seeks bankruptcy protection in the U.S., with potential implications for its Canadian operations. The chain’s lawyer, Linc Rogers, is set to ask an Ontario court to recognize and enforce the U.S. bankruptcy proceedings, which could involve selling off Canadian assets.

According to court documents, the goal of the bankruptcy proceedings is to facilitate a sale of most or all of Red Lobster’s assets, including those in Canada. The company, which has been in Canada since 1983, employs 2,000 Canadians across its 27 locations in Ontario, Alberta, Manitoba, and Saskatchewan.

The Canadian operations account for about 4.7% of the company’s consolidated revenue, with the company leasing 26 properties and owning two others in Ontario. The chain has faced significant challenges in recent years, including disruptions to its supply chain, rising costs, and shifts in dining trends exacerbated by the COVID-19 pandemic.

One particular promotion, the “Ultimate Endless Shrimp,” proved to be a financial drain, costing the company $11 million. The company is now investigating whether former executives and Thai Union, a seafood conglomerate with a stake in Red Lobster, encouraged excessive marketing of the promotion, leading to shortages of shrimp.

Despite these challenges, Red Lobster is working on a plan to reduce spending, simplify the menu, and implement a more sensible promotional calendar. The company’s court records show that it serves over 64 million customers annually and is a significant player in the lobster market.

Red Lobster’s history dates back to 1968 in the U.S., and it has since expanded to several countries worldwide. The chain was previously owned by General Mills before being sold to Golden Gate Capital in 2014. Thai Union Group acquired a stake in the chain in 2016 but is reportedly divesting from Red Lobster.

The future of Red Lobster’s Canadian assets remains uncertain as the company navigates its financial challenges. Stay tuned for updates on this developing story.