The seafood restaurant chain has been facing challenges in generating profits with its current leases and labor costs and is seeking guidance from commercial law firm King & Spalding to explore restructuring options, People magazine reported.
While sources claim Red Lobster is still undecided about whether or not to file for bankruptcy, the move would reportedly allow it to keep operating while it figures out its next move, which could include renegotiating leases and terminating some contracts.
Red Lobster is known for its endless shrimp deal, which became a permanent menu option in June last year. The company raised the price from $20 to $25 in response to losses, according to People.
Despite its endless shrimp promotion, the restaurant reported a $12.5 million operating loss in the fourth quarter of 2023.
In January, Thai Union Group Plc, which acquired Red Lobster in 2021, announced it would be parting ways with the chain due to “negative financial contributions to Thai Union and its shareholders.”
Red Lobster continued its attempts to generate publicity in the past few months. In February, the chain shared it would provide a limited number of customers with a free meal of endless lobster in honor of their annual Lobsterfest.
The restaurant chain also introduced its first-ever Endless Lobster Experience, which allowed 150 winners across the country to relish a complimentary two-hour dinner of unlimited lobster, two side dishes, and the chain’s famous cheddar biscuits.
Last month, the company appointed Jonathan Tibus, known for his expertise in “restructuring restaurants on the verge of bankruptcy,” as its new CEO, People reports.
Red Lobster did not immediately respond to theGrio’s request for comment.