NEW YORK — After months of dozens of restaurant closings and headlines about "endless shrimp" woes, Red Lobster is poised to soon exit from Chapter 11 bankruptcy protection.
A U.S. bankruptcy judge on Thursday approved the casual seafood chain's reorganization plan and sale to a lender group led by asset manager Fortress. The green light arrives under just four months after Red Lobster filed for bankruptcy protection as it pursued a sale, following years of mounting losses and dwindling customers while it struggled to keep up with competitors.
FILE - Signage at a Red Lobster restaurant, May 20, 2024, in Lincolnwood, Ill. (AP Photo/Teresa Crawford, File)
At the time of filing in May, Red Lobster's leadership shared plans to "simplify the business" through a reduction of locations. The Orlando, Florida, chain shuttered dozens of its North American restaurants in recent months — both leading up to and during the bankruptcy process. That includes more than 50 locations whose equipment was put up for auction just days before the Chapter 11 petition, followed by dozens of additional closures throughout the bankruptcy process.
Red Lobster said Thursday that it expects to operate about 544 locations across the U.S. and Canada upon emerging from bankruptcy. That's down from 578 disclosed as of May's filing.
Under terms of the acquisition, which is expected to close at the end of September, the chain will continue to operate as an independent company.
The chain will also get a new CEO — Damola Adamolekun, former chief executive of P.F. Chang's.
Adamolekun was appointed to head RL Investor Holdings, the newly formed entity acquiring Red Lobster, by Fortress last week. In a statement Thursday, Adamolekun said that Red Lobster "has a tremendous future" and thanked Jonathan Tibus, who will leave the company and step down as CEO, for his leadership during the bankruptcy process.
Red Lobster's purchaser is also providing additional funding to help the Orlando, Florida-based chain get back on its feet post-emergence. Adamolekun said the company's long-term investment plan includes a commitment of more than $60 million in new funding.
Red Lobster has seen multiple ownership changes over the course of its 56-year history. The chain was founded back in 1968 by Bill Darden, who sold Red Lobster to General Mills in 1970. General Mills later went on to form Darden Restaurants, which owns Olive Garden and other chains. Darden Restaurants was spun off from General Mills in 1995.
Darden Restaurants later sold Red Lobster to a private equity firm in 2014. Thai Union Group, one of the world's largest seafood suppliers, first invested in Red Lobster in 2016 and upped its stake in 2020 — but announced its intention to exit its minority investment earlier this year.
When announcing plans to divest in January, CEO Thiraphong Chansiri said the COVID-19 pandemic, industry headwinds and rising operating costs from Red Lobster had resulted in "prolonged negative financial contributions to Thai Union and its shareholders." It reported a $19 million loss from Red Lobster for the first nine months of 2023.
While not the sole reason, among sources of loss were — yes — those endless shrimp. Last year, Red Lobster significantly expanded the iconic all-you-can-eat special. But customer demand overwhelmed what the chain could afford. Thai Union leadership later noted that the deal's $20 price tag wasn't making enough money.
Tipflation is real: 31% of Americans are feeling tip fatigue
Tipflation is real: 31% of Americans are feeling tip fatigue
Updated
To tip or not to tip? Tipping is no longer recommended just at restaurants—there's the coffee shop, the bagel place, the dog groomer, the hairdresser, the Uber driver, the food delivery driver, and the list goes on. As the cost of essentially everything continues to rise, Way.com reports that adding a tip on top of high prices overwhelms at least 26% of Americans.
Pew Research Center recently surveyed 12,000 Americans on the current state of tipping and found that 81% of people always tip at restaurants, 65% after getting a haircut, and 59% after food delivery. Here's the breakdown of who is tipping and how often:
Suggested tip amounts seem to be everywhere
Updated
So, we know people are generally tipping, but here is where it gets interesting. 72% of people surveyed say tipping is expected in more places than 5 years ago. And 40% say they typically object to establishments' suggested tip amounts.
Most Americans (77%) say they are still tipping based on the quality of the service they receive. And the majority (57%) say they will tip 15% or less after a meal at a sit-down restaurant. Just 25% say they tip 20% or more while dining out.
That said, 36% of people say they are happy to tip, 33% are grateful to be able to tip, 31% felt pressured to provide a tip, 29% are excited to tip, and 26% felt overwhelmed by their perceived tipping responsibility. 23% of people admitted feeling guilty about tipping amounts, 23% say they feel embarrassed, and 20% admit to feeling confused by how much to tip.
Regarding cultural influences, Statista surveyed over 1,000 people worldwide about their thoughts on tipping. While 22% of Americans said tipping should not be expected, the number was much higher in the UK and Sweden, where over 40% said no to obligatory tipping.
So, where are experts falling in this new age of tipping overload? Brian Warrener, associate professor of hospitality management at Johnson and Wales University, recently told CBS MoneyWatch that he tips when he believes it is warranted. "If I haven't had much of a service interaction or great service, I have no problem not leaving a gratuity. It's not warranted in this case. You didn't earn it; you don't deserve it in this case … I don't feel like I have to leave a 20% tip on top of a cup of coffee at the local Starbucks."
As with many things, it seems that trusting your intuition and experience and not being influenced by outside pressures, tip jars, or digital suggestions is likely the best way to determine when and if you want to be gratuitous.
This story was produced by Way.com and reviewed and distributed by Stacker Media.
