Red Lobster, once the largest seafood restaurant chain globally, has filed for bankruptcy, citing over $1 billion in debt and minimal cash reserves. The company intends to sell its business to lenders and receive financing to continue operations while planning to close additional restaurants.

Known for its popular cheddar bay biscuits and seafood dishes, Red Lobster has faced challenges including competition from fast-casual and quick-service chains, mismanagement, and inflation. Underinvestment in marketing, food quality, and restaurant upgrades has hampered its ability to compete effectively.

Founded in 1968 by Bill Darden and later acquired by General Mills, Red Lobster became part of Darden Restaurants before being sold to Golden Gate Capital in 2014. Since 2020, seafood distributor Thai Union Group has been its largest shareholder, but the chain has struggled under its management.

Thai Union's cost-cutting measures and strategic errors, including changes to menu offerings, have adversely affected Red Lobster's performance. Customer traffic declined significantly, leading to executive turnover and financial losses. The company's bankruptcy filing blames Thai Union for decisions that increased costs and harmed profitability.

Additionally, the rise of fast-casual and quick-service chains has intensified competition in the casual dining sector, further impacting Red Lobster's sales. The company acknowledges having a bloated restaurant footprint and cites economic challenges and increased competition for its financial difficulties.

In preparation for bankruptcy, Red Lobster began closing restaurants and stopped paying vendors last year. With a $100 million financing agreement, it aims to continue operating under a restructuring plan led by its newly appointed CEO, Jonathan Tibus.