Red Lobster has filed for Chapter 11 bankruptcy. Here’s what that means for its 578 locations in the U.S. and Canada.
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CONWAY GITTENS: I’m Conway Gittens reporting from the New York Stock Exchange. Here’s what we’re watching on TheStreet today.
Stocks are looking to continue a four-week rally after the Dow closed above the key 40,000 level for the first time. Investors are looking ahead to earnings from Target and Nvidia, as well as minutes from the Federal Reserve’s May meeting. Markets are pricing in a 74 percent chance the central bank cuts interest rates by September.
In other news, the world’s largest seafood restaurant chain is filing for bankruptcy. Red Lobster announced the move after it revealed it had more than $1 billion in debt and less than $30 million in cash on hand. The company plans to sell the business to its lenders, which will allow it to receive financing and remain open. However, it does expect to have to close several restaurants.
Red Lobster was founded in 1968, and, according to its bankruptcy filing, now has 578 locations across the US and Canada, and serves 64 million customers a year. Twenty percent of all lobster tails purchased in North America are bought by the chain.
But Red Lobster has struggled over the years due to poor management, inflation, and increased competition. It has lost 30% of its customers since 2019 and its largest shareholder, Thai Union, divested from the company, taking a $530 million loss.
As part of its bankruptcy plan, Red Lobster said it will receive a $100 million financing agreement to help keep restaurants running.
That’ll do it for your daily briefing. From the New York Stock Exchange, I’m Conway Gittens with TheStreet.
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