An important brand known in the United States and with a strong international presence is in danger of bankruptcy.
When we talk about Red Lobster we are referring to a very important food chain in the United Statesbut also, with a strong presence throughout the world. The gastronomic company also has offices in Ecuador, Canada, Japan and Mexicoamong other countries, and is currently facing serious financial problems.
In its beginnings, it was famous for offering the service of shrimp without limits by only 20 dollars. This practice was an incentive to attract customers and generate exponential growth, but currently it had to close 23 branches in a very short time and its network has a total of approximately 500 locations.
Red Lobster
Why the Red Lobster chain went bankrupt
The seafood chain was affected by financial and operational decisions that led to a approximate loss of 11 million dollars. Partly because of his $20 unlimited shrimp promotion, considering he was maintaining a identical price to that of more than 30 years agowithout taking into account accumulated inflation.
As CNN found out, Red Lobster decided not to renew the lease contracts of several locations, totaling a total closure of more than 100 locations during the summer. Additionally, Credit Corp Group, a lender with experience in restaurant management, is in the process of acquiring the firm, in part because it has loaned it $100 million to help it overcome financial difficulties.
The future of the seafood chain depends largely on the financial firm’s ability to revitalize the brand, which for years was synonymous with high-quality seafood.
Among the main reasons for Red Lobster’s bankruptcy are the aforementioned endless shrimp promotion. He agreement with Thai Unionwhich became a product supplier, promoted the promotion of shrimp to sell more items and increased its costs. In addition, competitive companies appeared in the sector, such as Chipotle and Chick-fil-A, which negatively affected it.
Finally, a big blow was the break with Thai Unionwhich decided to sell its position in the company at a loss of $530 million, citing the pandemic, industry headwinds, higher interest rates, and rising material and labor costs as contributing factors.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
