Is Red Lobster filing for bankruptcy? Would that mean they are closing restaurant locations?

According to a recent Bloomberg report, Red Lobster, the US-based seafood chain restaurant, is considering filing for bankruptcy.

The restaurant chain is a staple of the genre, competing with Olive Garden, Chili’s, and Apple Bees. Since the company is not publicly traded, inquiring into its finances is complicated. Red Lobster is owned by Thai Union, a seafood-based food products group in Thailand that has been operating since 1977.

The Bloomberg report shows that many players within the private equity sphere are providing legal and financial advice to the Thai Union as a decision is made about the future of the beloved seafood chain. What exactly bankruptcy would mean for the nearly 650 locations is unclear, and until more information is learned about the company’s next steps, those sorts of questions cannot be answered.

When did Golden Gate Capital acquire Red Lobster?

Before Thai Union purchased Red Lobster, it was acquired by Golden Gate Capital, a San Fransisco-based private equity firm from Darden Restaurants, which owns Olive Garden, Ruth’s Chris Steakhouse, and Longhorn Steakhouse, among other chains.

When the sale was made, CNBC obtained a financial disclosure document produced by Derden that explained that the Red Lobster had been steadily losing money since 2011. After the sale, Darden said that selling Red Lobster allowed them “to maximize the value of Red Lobster, eliminate the risks and volatility associated with continuing to own the business, and provide a realistic market-validated valuation of Darden’s real estate assets.” In 2016, Thai Union purchased a twenty percent stake in the company. Thai Union is a significant player in the frozen and canned fish market, owning recognizable brands like Chicken of the Sea in the United States. In 2020, the company acquired the remainder of the chain, taking it off Golden Gate Capital’s hands less than a decade after purchasing it from Darden.