Restaurant chain Red Lobster is reportedly considering filing for bankruptcy because of an endless shrimp deal that lost the company money and other issues, like high real estate costs.
Red Lobster is considering filing for Chapter 11 bankruptcy protection to restructure its debts, Bloomberg reported, citing anonymous sources.
The bankruptcy would allow the company to continue operating as it tries to improve its financial situation.
In November, the company's Chief Financial Officer blamed the Endless Shrimp promotion for an $11 million loss in the third quarter.
The price was raised from $20 to $25 for the deal, according to the Daily Mail, but that didn't stop the financial bleeding.
An owner of the restaurant group announced plans in January to exit its investment due to the company's money problems.
"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," said Thiraphong Chansiri, Thai Union Group's CEO.
"After detailed analysis, we have determined that Red Lobster's ongoing financial requirements no longer align with our capital allocation priorities and therefore are pursuing an exit of our minority investment."
A new CEO, Jonathan Tibus, who is known to help turn around troubled businesses started at Red Lobster last month, Fox Business reported.
