Red Lobster has replaced its CEO and is exploring a bankruptcy filing.
After taking the reins of the Orlando, Florida, U.S.A.-based seafood restaurant chain in September 2023, Horace Dawson is retiring and will be replaced by Jonathan Tibus, the managing director of Atlanta, Georgia, U.S.A.-headquartered management consulting firm Alvarez & Marsal, according to the Orlando Business Journal.
Tibus is considered an expert in restructuring U.S. restaurant chains, having served as CEO of Kona Grill in 2019 when it filed for Chapter 11 bankruptcy protection, as well as chief restructuring officer for Krystal when it filed for Chapter 11 in 2020, according to Nation’s Restaurant News.
Red Lobster, which operates around 650 restaurants globally – down from 719 in 2020 – has struggled in recent years. In January 2024, Thai Union announced it would pursue an exit from its strategic partnership and minority investment in Red Lobster Master Holdings, which it has held since 2016.
Thai Union originally upped its investment in Red Lobster in 2020, taking a larger stake in the chain as part of a consortium that bought out Golden Gate Capital’s remaining equity stake via its North American subsidiary Thai Union Investment North America.
Because Red Lobster has not yet named a new buyer, it would appear that bankruptcy would be the best option followed by a sale after the balance sheet gets cleaned up, according to FoodserviceResults CEO Darren Tristano.
“It appears that Red Lobster is planning for a turnaround, bankruptcy, or fire sale,” he told SeafoodSource.
Red Lobster is now considered a “zombie brand,” Tristano said.
“[It] continues to wander aimlessly looking for direction,” he said. “The hiring of a financially focused CEO indicates their focus remains on financial strategy for survival and not emphasis on growth and the challenges to improve the brand strategy toward traffic growth and differentiation.”
Tristano specifically pointed to Red Lobster’s failure with its Endless Shrimp promotion, which caused Thai Union to revise Red Lobster’s loss guidance for fiscal year 2023 from THB 500 million (USD 13.7 million, EUR 12.7 million) to THB 700 million (USD 19.2 million, EUR 17.7 million), as a sign the company had drifted off-course. Red Lobster is now considered an older brand that can’t innovate to attract new, younger consumers, according to Tristano.
“Inflation has created declining consumer discretionary income and forced them to eat out less frequently, looking for value and discounts like the all-you-can-eat shrimp special that was a huge failure for Red Lobster financially,” Tristano said.
Additionally, older, more affluent customers are increasingly opting away from Red Lobster toward more polished casual seafood options, fine-dining seafood restaurants, or steakhouses that offer seafood, according to Tristano.
Red Lobster did not respond to SeafoodSource’s request for comment.
