Formerly bankrupt chain restaurant brings back value…

Formerly bankrupt chain restaurant brings back value deals

This year, a beloved seafood chain faced the most devastating dilemma a restaurant could ever face.

After five and a half decades of serving families across the country, the cheddar biscuits and endless shrimp empire began to crumble quickly in front of its customers' eyes.

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The popular seafood restaurant chain Red Lobster filed for bankruptcy protection in May this year with an accumulated debt of nearly $300 million. Unfortunately, nine other top restaurant chains in the U.S. that were also affected by consumers' more cautious spending habits post-pandemic filed as well.

However, a restructuring plan and a fresh new outlook may have been the change Red Lobster needed to get its business back on track.

A waitress carries a tray a lobster kettle and a crab trio dish at a Red Lobster restaurant.
Bloomberg/Getty Images

Red Lobster exits Chapter 11 bankruptcy and announces new leadership

In September, Red Lobster successfully exited Chapter 11 bankruptcy protection, less than four months after filing and only around eleven days after receiving approval for its strategic restructuring plan.

In this plan, the investment group RL Investor Holdings LLC acquired Red Lobster and named former P.F. Chang's CEO as the new lead of the seafood chain.

"Red Lobster is now a stronger, more resilient company, and today is the start of a new chapter in our history," said new CEO Damola Adamolekun in an announcement.

While multiple closures left the company with 545 restaurants across 44 U.S. states and four Canadian Provinces, Red Lobster's new ownership has begun making various strategic moves to return the chain restaurant back to profitability.

However, this strategy seems slightly contradictory when looking at Red Lobster's past financial mistakes.

Red Lobster returns to discounts and deals with a new, more cautious strategy

Last month, the seafood chain introduced a revamped menu. Although smaller than its previous one, it features various new items and revived beloved favorites like the iconic hushpuppies.

On Monday, Red Lobster announced the rollout of multiple money-saving deals and discounts just a few months after it emerged from its Chapter 11 bankruptcy filing.

Among the newly released deals is a nationwide happy hour menu that runs Monday through Friday from 3 p.m. to 6 p.m. It includes $5 drinks like Margaritas, "top-shelf" Long Island Ice Teas, Tito's Twisted Strawberry Lemonade, and various wines and beers. Additionally, select appetizers, including fan favorites like the Lobster Flatbread, Crab Queso, Seafood-stuffed Mushrooms, Lobster Dip, and Mozzarella Cheesesticks, will be $2 off.

Red Lobster also launched a Create Your Own Ultimate Feast to replace its infamous $20 all-you-can-eat shrimp as part of its value offerings. This new deal includes two premium picks, two shrimp dishes, and two sides for $41.99.

Before filing for bankruptcy, the restaurant offered $20 all-you-can-eat shrimp in an effort to attract loyal customers and hopefully increase daily traffic. However, the deal proved to be way too generous for the premium seafood, ultimately contributing to a $11 million quarterly loss last November.

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This time, to prevent Red Lobster from suffering the same fate twice, its new ownership is being more careful about delivering value to its customers.

The deals will only be available at cespecificocations, which might be a strategic way for Red Lobster to test these money-saving rollouts while remaining cautious by monitoring the market on a smaller scale.

In an interview, Adamolekun said there would be no more unlimited shrimp "because I know how to do math." Yet he didn't altogether reject the idea of bringing it back in the future, saying anything is possible.

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