Red Lobster Exits Bankruptcy As New Owner Commits To More Than $60M In Funding
Red Lobster’s popular Cheddar Bay Biscuits are safe.
Following its acquisition by Fortress Investment Group-backed RL Investor Holdings this week, the restaurant chain has exited bankruptcy and is flush with new funding.
In an announcement Monday, Red Lobster's new CEO Damola Adamolekun said the acquisition begins a new chapter for the company, adding it is now strong and more resilient.
“As part of our new ownership structure, we have backers who have a history of making successful investments in restaurants,” Adamolekun said in a statement. “Our comprehensive and long-term investment plan for Red Lobster includes a commitment of more than $60 million in new funding which will help us to deliver improvements across every aspect of our company.”
Red Lobster filed for Chapter 11 bankruptcy protection in May and closed 99 locations amid a search for qualified bidders to take over the struggling chain.
Fortress, a large creditor of Red Lobster that provided $100M in bankruptcy financing to the chain, was the only competitive offer submitted by a bid deadline in July. Its $376M credit bid for the chain’s assets reflected money Red Lobster owed in outstanding loans and other accrued expenses.
Fortress, with headquarters in New York and Dallas, formed SPB Hospitality in 2020 to acquire CraftWorks Restaurants & Breweries Inc., which operates Logan’s Roadhouse, Old Chicago Pizza and other brands. SPB went on to acquire the J. Alexander’s and Krystal chains, the Orlando Business Journal reported.
TCW Private Credit and Blue Torch are co-investors in RL Investor Holdings, according to a press release announcing the acquisition.
Red Lobster has changed hands a few times since longtime owner Darden Restaurants sold it in 2014 for $2.1B to Golden Gate Capital. Thai Union Group bought Golden Gate’s stake in 2020.
Under Thai Union's ownership, the seafood chain’s endless shrimp promotion was made a permanent menu item in May 2023. The chain saw traffic rise but operating losses hit $12.5M by the end of that year.
Other family sit-down restaurant chains like Applebee's and TGI Fridays have also been hit hard by changing consumer tastes.
Red Lobster now operates 545 restaurants in 44 U.S. states and four Canadian provinces, according to the release.
