Red Lobster has filed for Chapter 11 bankruptcy days after it unexpectedly closed dozens of restaurants.
The restaurant chain, which is the largest seafood chain in the world, has more than $1 billion in debt and plans to sell the business to its lenders, CNN reported.
It has more than 100,000 creditors, The New York Times reported.
Analysts said the reason for financial issues could be attributed to recent mismanagement, competition and inflation, CNN reported. The Associated Press cited rising leases and labor costs as challenges for the restaurant.
A recent all-you-can-eat shrimp promotion, a deal that the company was known for, recently overwhelmed locations and, according to the AP, caused the company to suffer millions in losses.
CNN reported that the company took the typically limited-time promotion and made it a permanent part of the menu in 2023. It contributed to an $11 million quarterly loss, the Times reported.
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