This comes after Red Lobster reported a $12.5 million operating loss in the fourth quarter of 2023
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Red Lobster is considering a Chapter 11 bankruptcy filing, according to news sources.
The restaurant chain is considering filing for bankruptcy amid growing debt, sources with knowledge on the matter told Bloomberg.
The restaurant has been finding it difficult to make money with their current leases and labor costs, and are currently seeking advice from commercial law firm King & Spalding in order to figure out how to restructure to cut costs, the outlet also reported.
The sources said that Red Lobster still hasn’t made a final decision when it comes to whether or not to file for bankruptcy, but noted that it would help the business continue to operate while they figure out their next plan, which may include renegotiating some leases and removing some contracts.
Red Lobster did not immediately respond to PEOPLE’s request for comment.
Michael Nagle/Bloomberg/Getty
A seaside shrimp combo dish is displayed for a photograph at a Red Lobster restaurant stands in Yonkers, New York, U.S., on Thursday, July 24, 2014.
Related: Red Lobster Is Giving Out Free ‘Endless Lobster’ Dinners to Select Customers
This comes amid difficult financial times for the restaurant, as it reported a $12.5 million operating loss in the fourth quarter of 2023, despite its endless shrimp promotion, according to CNN.
A month later, Thai Union Group Plc, which took over the company in 2021 announced its plan to exit Red Lobster since it caused “negative financial contributions to Thai Union and its shareholders,” the outlet reported.
There have also been some recent internal changes at the company as Red Lobster named Jonathan Tibus as its new CEO last month, according to a report by Orlando Business Journal. He has been known for his expertise in restructuring restaurants on the verge of bankruptcy, according to Nation’s Restaurant News.
Michael Nagle/Bloomberg/Getty
A waitress carries a tray a lobster kettle and a crab trio dish at a Red Lobster restaurant in Yonkers, New York, U.S., on Thursday, July 24, 2014.
Related: Nicki Minaj Returns to Red Lobster After Being Fired for Dinner Date with Jimmy Fallon
In the past several months, Red Lobster has tried to drum up some publicity. In February, the chain announced that it would offer a limited number of guests a free meal of endless lobster in honor of their annual Lobsterfest.
The restaurant chain announced that the first-ever Endless Lobster Experience would give 150 winners across the country the chance to enjoy a complimentary, two-hour dinner of endless lobster, two side dishes and the chain’s popular cheddar biscuits.
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Bill Darden first opened the restaurant in 1968 in Lakeland, Fla. and the Darden Restaurants helped grow the chain to several locations in the U.S. before Golden Gate Capital took over the company in 2014, according to its website and Bloomberg. Following the COVID-19 pandemic, Thai Union Group Plc took over the company.
Red Lobster has been known for its endless shrimp deal. The company made it a permanent menu option in June, and increased the price from $20 to $25 as a result of losses.
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