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Red Lobster sought to reassure customers that it will not be going out of business despite filing for Chapter 11 bankruptcy.
The company issued a statement on Tuesday acknowledging its current financial hardships and stressing that a legal restructuring will allow it to strengthen its surviving restaurant locations.
“Bankruptcy is a word that is often misunderstood,” Red Lobster’s communications team said in the statement posted to social media. “Filing for bankruptcy does not mean we are going out of business. In fact, it means just the opposite. It is a legal process that allows us to make changes to our business and our cost structure so that Red Lobster can continue as a stronger company going forward.”
The statement continued, “As many of you know, we recently made the tough decision to close a number of our restaurants. The truth is, some of the world’s most beloved brands like Delta and Hertz have used this same process to protect their futures and their customers stood with them and rooted them on. And because of that, they emerged stronger.”
RED LOBSTER FILES FOR BANKRUPTCY: BLAME FOCUSES ON SHRIMP DEAL
A Red Lobster restaurant location is seen in Leesburg, Florida. (Stephen M. Dowell/Orlando Sentinel/Tribune News Service via Getty Images / Getty Images)
An announcement earlier this month indicated the company would be “auctioning off 50+ locations across the country.”
Restaurant liquidation company TageX Brands announced it would be overseeing the sale of equipment at the various closing locations, calling the situation its “largest restaurant equipment auction ever.” Only 48 locations were specifically listed in its catalog.
Red Lobster filed for Chapter 11 bankruptcy protection in a Florida court late Sunday night, saying it will use “the proceedings to drive operational improvements.”
RED LOBSTER’S ULTIMATE ENDLESS SHRIMP DEAL CONTRIBUTED TO 3RD-QUARTER OPERATING LOSS
A “location closed” sign hangs in the window of a closed Red Lobster restaurant in Torrance, California. Dozens of Red Lobster locations were listed as “temporarily closed” on the Red Lobster website, while equipment from “over 50 locations” went up (PATRICK T. FALLON/AFP via Getty Images / Getty Images)
The chain said it received a $100 million financing commitment from its existing lenders and will continue to operate its remaining restaurants during the bankruptcy process.
“Together, we have a lot worth rooting for. We’ve made delicious, high-quality seafood accessible for generations,” the Tuesday statement read. “Many of you tried lobster for the first time at our restaurant. We’ve brought you Lobsterfest and Crabfest over the years. And of course, no meal is complete without Cheddar Bay Biscuits. We are here and ready to continue making memories with you.”
In the wake of the pandemic, Red Lobster looked to boost traffic to its restaurants by offering a $20 all-you-can-eat shrimp deal that the company hoped would serve as a loss-leader and bring in more customers who would become regulars.
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Red Lobster’s famous Cheddar Bay Biscuits are served at a restaurant location in Alexandria, Virginia. (Deb Lindsey For The Washington Post via Getty Images / Getty Images)
However, the deal itself proved too good for customers to pass up. The Los Angeles Times reported that some patrons took to social media to brag about how many shrimp they were able to scarf down, including one woman who said she ate 108 shrimp during a four-hour meal.
“Join us. Dine with us. Root for us. Together, we can write a new chapter,” Red Lobster told its customers via social media.
FOX Business’ Eric Revell contributed to this report.
