Rudy Milian, CRRP’s Post

Red Lobster has emerged from bankruptcy with new management and ownership as the struggling seafood-restaurant brand looks to turn the tide after seeking to boost traffic with an all you can eat shrimp deal that wound up costing it millions and causing it to file bankruptcy. https://lnkd.in/gv2PPAQA #bankruptcy #landlords #retail #chapter11 #chapter7 #reorganization #creditorsrights #debtorcreditorsrights #landlordtenants #ceosanddirectors #ceosandofficers #officersanddirectors

Red Lobster filed for #bankruptcy an early AM [U.S.] report in The Wall Street Journal said. It plans to sell itself to current #lenders. The #Orlando-based #restaurant operator got $100M in #debtor-in-posession #financing commitments. Golden Gate Capital bought the #casualdining seafood chain from multi-concept operator Darden 10 years ago for $2.1B. The #privateequity firm sold half [to be staged at a 10-year interval] of the chain to Thai Union Group PCL. in 2016 for an upfront $575M. It sold its remaining stake to the same buyer four years later. Red Lobster suffered during the #pandemic when both sit-down #dining and commercial #fishing plunged. The #chain had about 650 locations at last count and recently closed dozens of sites in 20 states. #PublicCompany Darden’s move a decade ago looks prescient of course; a long-time owner selling cd be a #redflag. I recall it had then gone under new execs and was trying to focus on its higher-end chains. On that score, Red Lobster was costlier without being worth it. Darden still owns Olive Garden, e.g., which is the reverse — moderate but can feel like family abundance or even [relatively] snooty, with the grated cheese and whatnot, plus the value, via the endless soup and salad. My town has locations of each. Can’t escape from the lobstah for less than $30+, and it’s tumbleweeds in there. The OG is $20, and it’s packed. People considering lobster and scampi are prolly willing to splurge — go to truly high-end — rather than an ersatz chain. “Several restaurant #chains have recently declared bankruptcy or are seeking a sale. Higher #finance costs, slower #consumer #spending and declining #investor interest in #food #investments have hurt restaurants’ #balancesheets, filings and restaurant executives showed,” the Journal said.

Red Lobster bankruptcy has much to do with Wall Street "bean counters" and "financial guru MBAs" (working for Private Equity) than business model and management problems or all you can eat shrimp promotions. When PE acquired Red Lobster they immediately decided to sell off the real estate assets of the restaurant chain. The sale of the real estate assets was sort of an original sin (or death wish) for Red Lobster's current troubles. As a restaurant, if you don't own your real estate you are prone to cash problems whenever sales fluctuate. Private Equity is great at (and a master of) just unloading assets and monetizing assets. And in this case they effectively paid for the purchase of Red Lobster by selling the real estate from under the restaurants. It was great for investors, they probably even made more money, but when the restaurant sales fell, the profitability was challenged, and Red Lobster debt looked bad, and then suddenly those leases started erroding revenue profits. The retail and restaurant apocalypse is all about having their real estate sold out from under their businesses so that you have to pay the rent in good times and in bad. https://lnkd.in/gGRJFjyG #redlobster #privateequity #pe #bankruptcy #equity #realestate #debt #restaurant #lease #rent #assets #selloff #profitability #sales #retail

The ultimate endless shrimp deal could spell the ultimate end. While the pandemic and rising labor costs have made the restaurant business harder than ever, Red Lobster can't get out of the red due in part to losses from all-you-can-eat promotions. Truth be told, Red Lobster has faced some rough seas the past few years, and the last straw is the $22 million loss in 2023 for its largest investors who are now seeking an exit before they get pulled under. Unfortunately, Cheddar Bay Biscuits likely won't provide the lifejacket needed to stay afloat. Restaurant chains have struggled mightily since the pandemic, and with razor-thin margins, declines in-person dining have contributed to mounting operating losses. For Red Lobster, the seafood chain embarked on marketing and publicity campaigns that, well, worked too well. In fact, the popular all-you-can-eat promotions haven't been all smooth sailing. The $20 deal resulted in a whopping $11 million loss for the company in just one quarter. And while the price has since been raised to $25, chances are the chain won't be able to sell enough shrimp to fully recover the $11 million hit. Is the Lobsterfest really over? Well, it depends. Red Lobster obviously is a mayday situation, and bankruptcy would buy it time to come up with a plan moving forward, which probably includes renegotiating leases, removing some contracts, and any other restructuring to cut costs. That doesn't necessarily mean Red Lobster winds up in the boiling pot, but some of its locations could wind up getting cooked https://lnkd.in/etK5MQv6 #redlobster #restaurant #marketing #business #bankruptcy #economics #labor #realestate

🚨 BREAKING NEWS: Facing an uncertain future, Red Lobster takes unprecedented steps. With 99 locations up for auction and investor exit looming, the seafood chain navigates possible bankruptcy. KEY TOPICS: 🔸Closure Locations: Spread across the U.S., including Denver, Indianapolis, Rochester (NY), Sacramento (CA), San Antonio, and San Diego. 🔸Magnitude of Closure: Restaurant Business Magazine reports 99 locations shutting down, constituting about 15% of the chain's 700 locations. 🔸Seeking Buyers: CNBC reports Red Lobster's efforts to avoid bankruptcy by seeking a buyer. Check out more here: https://lnkd.in/gm5ZqAfw

Red Lobster, the seafood restaurant chain that dates back to the late 1960s, filed for bankruptcy protection earlier as the company struggled to keep its head above water. Many in the media have and will write articles about the failure of the seafood chain and will almost likely (and in an utterly ignorant way) blame the restaurant’s $20, all-you-can-eat shrimp menu item was the subject of the demise of Red Lobster. However, as I pointed out in one of my previous posts, the bankruptcy documents showed that a string of bad financial decisions by Red Lobster’s owner, Golden Gate Investments, had hurt the brand in a multitude of ways. Some in the media and many analysts also blamed the chain's struggle to recover from the pre-pandemic foot traffic levels, and the company’s inability to diversify. Those may be some reasons but the fundamental reason for the demise of this seafood restaurant chain was in the early days decision of the PE's greed and shortsighted actions in selling all the assets (all paid-off buildings owned by the restaurant chain) after taking over Red Lobster. Once the assets were sold off and the PE recouped their investment, the bean counters left the chain struggling to pay their high leases in bad times. So, in reality this great seafood chain did not go bankrupt because of the all you can eat shrimp, the lack of diversification of the decline in foot traffic, the real culprits behind where know-it-all greed financiers, MBAs and PE experts sucking the blood out of a good business. https://lnkd.in/g5vjM8qj #redlobster #pe #seafood #beancounters #mba #experts #privateequity #equity #diversification #restaurant #chain #food #bankruptcy #realculprits #pandemic #investments

🚨 Iconic Red Lobster declares bankruptcy. Blame it on the shrimp 🍤. Apparently, last year’s $20 Endless Shrimp promotion was one of the big straws that finally broke the lobster's back. Meant to increase ⬆️ foot traffic, which it did, the too-generous promotion’s popularity led to $11 million in losses in Q3 of last year. Just another hit to the company’s growing financial woes. 📌 Fast-forward to this year and the company just closed about 100 restaurants, with 48 set to enter auctions to sell furniture and equipment. Now, the company has filed for Chapter 11 bankruptcy protection to improve operations and streamline their business. I hope this iconic restaurant brand can make its way to safer harbors, however their locations are usually saddled with really high rents, given a sale-leaseback situation a few years ago. We will see where the ocean currents take them! Read more here: https://bit.ly/44QHIaB #TSCG #CREtail #RetailStores #CRE #Retail

Industry Alert: Red Lobster Faces Financial Challenges Red Lobster, once a giant in the seafood restaurant chain, is reportedly preparing for a Chapter 11 bankruptcy filing, according to The Wall Street Journal. This development follows a week marked by the sudden closure of up to 99 locations nationwide and the appearance of their kitchen equipment on liquidation websites. The New York Times highlights that Red Lobster has been financially struggling for some time, exacerbated by last year's unlimited shrimp promotion which reportedly pushed the company deeper into financial distress. This news arrives as a significant signal to the industry, reflecting the potential end of 'all-you-can-eat' promotions that many of us remember fondly from chains like Red Lobster and others during our childhoods. It raises important questions about the sustainability of such business models in today's economic climate. #RedLobster #Bankruptcy #RestaurantIndustry #BusinessModels #EconomicChallenges #linkedinnews #linkedincommunity

Red Lobster Files for Bankruptcy Amid Struggles in Competitive Market - Red Lobster has filed for bankruptcy, citing difficulties in navigating a competitive and evolving restaurant industry. - The chain faced ongoing challenges such as declining foot traffic, increased operational costs, and shifts in consumer preferences. - Despite efforts to revitalize the brand with new menu items and marketing campaigns, financial hardships persisted. - The bankruptcy filing underscores the broader challenges facing many legacy restaurant brands in adapting to changing market dynamics. #RedLobster #Bankruptcy #RestaurantIndustry Read more: [https://buff.ly/4bHJmNU]