Red Lobster has successfully emerged from Chapter 11 bankruptcy after a federal judge approved its recovery plan, which addresses problems like a disastrous “endless shrimp” promotion, heavy debt, numerous restaurant closures, and a noticeable drop in customer visits.

Through this bankruptcy plan, RL Investor Holdings LLC—a newly established entity backed by Fortress Investment Group LLC—will take ownership of Red Lobster. The acquisition is anticipated to wrap up by the end of the month, according to a company announcement.

This acquisition marks Fortress’s latest move in obtaining a company in financial trouble, following its purchases of Vice Media and Alamo Drafthouse, which has since been sold to Sony Pictures Entertainment.

Fortress also oversees a company called SPB Hospitality, which includes brands such as Logan’s Roadhouse, Krystal, Old Chicago Pizza & Taproom, and Twisted Tenders, according to spokesperson Gordon Runté.

“We definitely have a wealth of experience in this area,” Runté told YSL News regarding another acquisition in the restaurant sector. “Red Lobster is a large operation, with over 500 locations, but we’re optimistic about its potential.”

‘This is a great day for Red Lobster’

Once the deal concludes, Damola Adamolekun will step in as CEO of Red Lobster, succeeding Jonathan Tibus, who will depart from the company. Adamolekun previously held the CEO position at P. F. Chang’s.

“Today is a significant milestone for Red Lobster,” Adamolekun commented. “With the support of our new investors, we have an extensive and long-term investment strategy, including over $60 million in fresh funding, to rejuvenate this beloved brand while honoring its rich heritage.”

“Red Lobster has a bright future ahead, and I’m eager to launch our plans with our 30,000-strong workforce across the U.S. and Canada,” he added.

Following the court’s endorsement, Red Lobster is set to continue functioning independently, keeping 544 establishments spread across 44 U.S. states and four Canadian provinces, as confirmed by the company.

“I’m proud of what we accomplished during this restructuring—Red Lobster will emerge from Chapter 11 stronger in both finances and operations, supported by new investors deeply committed to growth,” stated Jonathan Tibus in the announcement.

Red Lobster closed 23 locations last week

Recently, Red Lobster shut down 23 more restaurants nationwide.

These closures have increased the total to at least 129 restaurants shut down across the U.S. The latest closures include three locations in Florida, Illinois, and Virginia; two in Minnesota and New York; and one each in Arizona, California, Colorado, Georgia, Indiana, Missouri, North Carolina, Ohio, and South Carolina.

Why did Red Lobster file for Chapter 11 bankruptcy?

Red Lobster filed for bankruptcy protection on May 19 after closing numerous locations and announcing its strategy to streamline operations. Legal documents later submitted in the Middle District of Florida indicated that the bankruptcy was triggered by substantial debt, a change in leadership, an unsuccessful shrimp promotion, and a 30% decline in patron visits since 2019.

“Recently, the company has encountered multiple financial and operational difficulties, such as a challenging economic climate, an inflated and underperforming restaurant portfolio, misguided strategic choices, and heightened competition in the dining sector,” Tibus wrote in the bankruptcy filings.

Tibus, who was appointed CEO after serving as chief revenue officer on January 11, explained that “it soon became evident that Red Lobster’s performance was declining and had been for several years.”

Contributing: Natalie Neysa Alund and Gabe Hauari/ YSL News