Missouri franchises largely unaffected as Red Lobster faces bankruptcy

Red Lobster is seeking bankruptcy protection days after closing dozens of restaurants.

Nam Y. Huh ~ Associated Press, file

The Orlando, Florida-based seafood chain Red Lobster has filed for bankruptcy, but it is not out of business just yet.

On Monday, May 13, the company closed 99 restaurants in 28 states. One week later, on Sunday, May 19, it announced it was filing for Chapter 11 bankruptcy protection after securing $100 million in financing commitments from lenders.

“This restructuring is the best path forward for Red Lobster,” company chief executive officer Jonathan Tibus said in a May 19 news release. “It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth. The support we’ve received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests.”

The Cape Girardeau location, as well as nearby restaurants in Marion, Illinois, and Paducah, Kentucky, remain unaffected. Only one Red Lobster in Missouri, the Jefferson City location, closed as a result of the bankruptcy. The state still has 16 Red Lobster restaurants.

The nearest Red Lobster to shut down compared to Southeast Missouri was one of two such restaurants located in Memphis, Tennessee.

The company cited increased operational difficulties, namely the coronavirus pandemic and rising inflation, as the main reasons for the bankruptcy. Tibus also said Red Lobster’s majority stakeholder, Bangkok-based seafood supplier Thai Union, made the restaurant have an exclusive deal with it by eliminating competitors, leading to higher costs for Red Lobster to operate. Thai Union disputed the allegations Thursday, May 23.

Red Lobster, founded in 1968, is the world’s largest seafood restaurant company with around 650 locations worldwide, most of which are in the United States. They are primarily known for their eponymous lobster, shrimp and cheddar biscuits.

Do you want more business news? Check out B Magazine, and the B Magazine email newsletter. Go to www.semissourian.com/newsletters to find out more.