- Red Lobster could file for Chapter 11 bankruptcy protection next week, per The Wall Street Journal.
- The restaurant chain, burdened with hundreds of millions in debt, recently shut down 52 stores.
- Red Lobster blamed some of its financial struggles on an all-you-can-eat shrimp promotion.
Restaurant chain Red Lobster could file for bankruptcy protection as early as next week, The Wall Street Journal reported on Tuesday.
People familiar with the matter told the Journal that the company, overwhelmed with hundreds of millions in debt, plans to file a Chapter 11 bankruptcy petition in Orlando before Memorial Day.
Bloomberg previously reported in April that the restaurant company was considering filing for Chapter 11 bankruptcy protection.
The bankruptcy news comes after Red Lobster, which has around 650 locations, shut down over 50 locations across the US, restaurant liquidator TAGeX Brands confirmed to Business Insider on Monday.
States that will see Red Lobster closures include California, Colorado, Florida, New York, and Texas.
Over the past few years, financial troubles have beset the popular seafood chain.
Leasing costs, less foot traffic during COVID-19 lockdowns, and a failed all-you-can-eat shrimp promotion are some of the reasons Red Lobster and outside observers have attributed to the company's downfall.
These financial troubles resulted in Thai Union Group, which had assumed majority ownership of Red Lobster in 2020, pulling out its investments. On a February earnings call, Thai Union Chief Executive Thiraphong Chansiri said, "We're going to exit. We are not going to inject any more money into Red Lobster."
"The combination of the Covid-19 pandemic, sustained industry headwinds, higher interest rates, and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders," Chansiri previously said.
Red Lobster and Thai Union Group did not immediately respond to a request for comment from BI.