Red Lobster is seeking to hook a buyer as the struggling seafood chain attempts to avoid bankruptcy, according to a report.
The fast-casual chain — known for its cheddar bay biscuits and all-you-can-eat shrimp — mulled a Chapter 11 filing in order to restructure its mounting debt, but has also sought a buyer in recent months, people close to the situation told CNBC.
At least one firm had reportedly been interested in buying the company, which has 649 restaurants in the US and boasts outposts in Thailand, Japan, Mexico and Ecuador.
The deal, however, never came to fruition, CNBC reported.
Red Lobster, which managed to avoid bankruptcy during the pandemic, is saddled with long-term, costly leases and rising labor costs, according to Bloomberg, which first reported on Red Lobster’s potential bankruptcy filing last week.
Even if a buyout took place, it would be difficult for Red Lobster to avoid Chapter 11, per CNBC, as many of the leases the company is looking to get out of are notoriously difficult to change outside of bankruptcy.
A final decision has yet to be made about the bankruptcy filing, and restructuring discussions are still underway between Red Lobster, its owner Thai Union Group Plc, key lender Fortress Investment Group and King & Spalding, the law firm advising the eatery on how to shed some of its contracts and renegotiate its leases.
Red Lobster has had multiple owners since its first outpost opened in Lakeland, Fla., in 1968.
More than five decades later, Thai Union Group, which previously owned just 25% of the company, took control of Orlando-based Red Lobster in 2020 after buying Golden Gate Capital’s stake.
Golden Gate Capital had bought the chain from restaurant operator Darden in 2014 for $2.1 billion.
However, Thai Union Group — best known for its exports of canned and frozen seafood — wrote down its share of Red Lobster early this year.
The firm said in a statement on its website at the time that the restaurant’s “ongoing financial requirements no longer align with Thai Union’s capital allocation priorities.”
“The combination of COVID-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders,” added Thai Union Group chief Thiraphong Chansiri.
Thai Union Group also noted that it recorded a share loss of roughly $19 million in the first nine months of 2023 from Red Lobster alone.
As a result, the Thailand-based company included a $530 million non-cash impairment charge in its fourth-quarter earnings report for its investment in Red Lobster.
Representatives for Thai Union Group and Red Lobster did not immediately respond to The Post’s request for comment.
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