A massive restaurant chain now explores filing for bankruptcy after hurting its financial position by offering an affordable meal.
Red Lobster hurt its financial position by offering its popular all-you-can-eat shrimp meal for $20.
“That worked to increase traffic, but it was a money loser. That deal remains on the menu, but it now costs $25,” reports TheStreet.
Red Lobster has a proud history, and in many ways it brought lobster and seafood to markets where it otherwise was offered only in fine-dining experiences.
“What was once a single family-owned restaurant in Lakeland, Florida, now has over 700 locations around the world,” says the company on its website.
The chain has been owned by Thai Union Group, which wrote down its stake in the company earlier this year.
“During the past years, the combination of Covid-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs have impacted to Red Lobster business resulting in prolonged negative financial contributions to the company and its shareholders,” Thai Union said in a Jan. 16 media release.
“After detailed analysis, the board of directors has determined that Red Lobster’s ongoing financial requirements no longer align with our capital allocation priorities and therefore the company is pursuing an exit of the minority investment.”
It’s a situation that has the chain looking for a lifeline.
“Red Lobster has been getting advice from law firm King & Spalding,” Bloomberg News reported, citing people familiar with the matter.
“The dining chain is considering a possible Chapter 11 filing to shed some long-term contracts and renegotiate a swath of leases, the people said,” Bloomberg reported.
Fortress Investment Group, the company’s top lender, has been involved in the Chapter 11 discussions, according to the news service.
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Also Read: A Massive Grocery Brand Now Files For Chapter 11 Bankruptcy
Other Economy News Today
A massive grocery is now cutting major job roles a little over a year after the discounter let go of roughly 200 workers stateside.
Discount grocer Lidl has undergone a fresh set of layoffs stateside, a Lidl US spokesperson said in an email.
The cuts impacted corporate roles across three units at Lidl US.
People impacted by the layoffs held roles ranging from administrative assistant to senior IT specialist, according to LinkedIn posts.
The layoffs come a little over a year after Lidl US let go of roughly 200 employees — primarily impacting employees at its U.S. headquarters in Arlington, Virginia.
The layoffs are the latest move by Lidl to rightsize its operations in the U.S. as it struggles to gain ground while rival Aldi hits the accelerator.
“Lidl US made the difficult decision to eliminate corporate roles across three functions within the business. While this is never an easy decision, we believe it is the right one for the business,” the spokesperson wrote.
The Lidl US spokesperson declined to say how many workers were impacted.
LinkedIn posts from several laid-off employees noted that the layoffs are part of a corporate restructuring plan.
A marketing manager who was laid off noted in a LinkedIn video posted Thursday that graphic designers, content producers, social media managers and information technology workers were included in the layoffs.
Laid-off Lidl US workers will receive severance packages and career transition support, the spokesperson said.
The job cuts last year came at a time when Lidl US was undertaking a corporate restructuring and aiming to boost its financial health.
Lidl US also underwent a round of layoffs at its U.S. headquarters a few years prior, according to German business publication Lebensmittel Zeitung.
Lidl opened its first U.S. stores in 2017 but has struggled to hit its stride and grow stateside.
Meanwhile, competitor Aldi, which entered the U.S. in the 1970s, continues to rapidly expand its store fleet, with plans to open an additional 800 stores by the end of 2028, reports Grocery Dive.
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Also Read: A Massive US Bank Is Now Freezing Customers’ Money
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