A judge on Thursday approved Red Lobster’s Chapter 11 bankruptcy plan, clearing the way for the seafood chain to be sold to a group led by Fortress Investment Group.
The Orlando-based casual-dining company filed for bankruptcy in May with liabilities of between $1 billion and $10 billion, capping a tumultuous period of sales declines, losses and leadership turnover. Before and during the bankruptcy proceedings, Red Lobster closed more than 100 struggling restaurants across the country and now stands at 544 locations.
One of the industry’s most well-known brands, Red Lobster will look to get back on track under its new owner, which last week named a new chief executive for the chain, former P.F. Chang’s CEO Damola Adamolekun.
Calling it a “great day for Red Lobster,” Adamolekun in a statement said the company has a plan to reinvigorate the brand with the help of $60 million in new funding from its investors.
“Red Lobster has a tremendous future, and I cannot wait to get started on our plan with the company's more than 30,000 team members across the USA and Canada,” Adamolekun said.
New York-based Fortress, along with co-investors TCW Private Credit and Blue Torch, was the stalking-horse bidder in Red Lobster’s sale process and won the bidding after no other buyers came forward. It offered approximately $375 million, which included $275 million in debt and $100 million in debtor-in-possession financing, for the chain, according to bankruptcy documents. The deal is expected to close before the end of the month.
Fortress has some restaurant experience. An affiliate, SPB Hospitality, owns Krystal, Logan’s Roadhouse and about a dozen other mostly full-service concepts, many of which were acquired out of bankruptcy. Red Lobster will become Fortress’ biggest restaurant holding by far, with more than $2.1 billion in sales last year, according to Technomic data.
Red Lobster has changed hands several times since it was founded in 1968 by legendary restaurateur Bill Darden. It was acquired by General Mills in 1970 and spun off as part of the newly created Darden Restaurants in 1995. In 2014, Darden sold it to private-equity firm Golden Gate Capital. Two years later, Golden Gate sold a 25% stake in Red Lobster to Bangkok-based seafood company Thai Union Group. In 2020, Thai Union and a consortium of investors called the Seafood Alliance bought the remainder of the chain.
Red Lobster stagnated after the sale from Darden to Golden Gate, with sales and unit count largely unchanged from 2014 to 2019. After an initial bounce-back from pandemic lockdowns, the chain struggled with rising costs and falling traffic. In an effort to turn the tide, Thai Union last year launched an all-you-can-eat shrimp deal that led to heavy losses. In January, it announced that it was exiting its investment in the chain.
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