It looks like the cheddar bay biscuits may have not been enough to save popular seafood chain Red Lobster.
According to reports the restaurant franchise is considering a Chapter 11 bankruptcy filing to help restructure its debt.
Law Firm King & Spalding is advising the brand, per a Yahoo Finance report. According to the outlet, the move comes to help alleviate the strain of some long-term contracts, and to renegotiate a litany of leases.
The 56-year-old restaurant has become synonymous affordable seafood options, like its popular $20 all-you-can-eat shrimp deal, but it wasn’t quite as financially successful as it hoped, according to reports. The deal was popular but it ended up costing the company more than $11 million in one quarter.
Red Lobster is not the only once lucrative chain restaurant facing financial in 2024. For instance southern-themed eatery Cracker Barrel saw a significant decrease in customer traffic in recent years. Denny’s also closed 57 locations because of inflation-induced financial issues. Per reports, a Denny’s location previously needed $1 million to be in the red. Now, it requires $1.2 million, Robert Verostek, Denny’s CFO stated.
Similarly, the parent company of fast casual chain Applebee’s announced the closure of 46 locations in 2023 during a fourth-quarter earnings call.
So, why do so many chain restaurants seem to be in financial trouble as of late? Some experts are blaming the challenges on hiked prices that started last year, and seem to be catching up to the businesses now that the threat of a recession is more nigh.