(Bloomberg) — Seafood restaurant chain Pink Lobster filed for chapter, succumbing to onerous leases, excessive labor prices and a disastrous limitless shrimp promotion.
Most Learn from Bloomberg
The Orlando, Florida-based firm filed for Chapter 11 safety on Sunday, itemizing belongings and liabilities of $1 billion to $10 billion every in its chapter petition. The submitting permits the corporate to maintain working whereas it really works out a plan to repay collectors.
Pink Lobster plans at hand management of the corporate to its lenders, led by Fortress Funding Group, who’ve agreed to offer $100 million in financing to assist the chain by chapter. The takeover supply is within the type of a stalking horse bid, which means it’ll set the ground worth for Pink Lobster’s belongings and is topic to raised bids ought to any materialize within the coming weeks, based on courtroom paperwork.
The restaurant chain had been deteriorating for a number of years, with diners down round 30% since 2019, Chief Government Officer Jonathan Tibus wrote in courtroom papers. Whereas the enterprise had proven indicators of restoration because the pandemic, gross sales declined sharply within the final 12 months, Tibus wrote. It misplaced $76 million within the 2023 fiscal 12 months.
Inflationary pressures have saved prospects from eating out and better labor prices strained the corporate’s funds. A “materials portion” of Pink Lobster’s leases have been priced above market charges. In Might 2023, the corporate modified its $20 “Final Infinite Shrimp” from a limited-time supply to a everlasting promotion, costing it $11 million as diners devoured costly plates of shrimp.
Pink Lobster traces its roots to a single restaurant in Lakeland, Florida in 1968. It expanded quickly within the Nineteen Seventies and Eighties, and developed a loyal following for its Cheddar Bay Biscuits. The corporate now operates greater than 550 eating places within the US and Canada.
The restaurant chain, which has been owned by seafood provider Thai Union Group Plc since 2020, serves 64 million prospects per 12 months and purchases 20% of all North American lobster tails, in addition to 16% of all rock lobsters worldwide.
Thai Union and Pink Lobster had been in talks with lenders for an out-of-court deal that may hand the collectors 80% of the corporate, however discussions fell by. Lenders made extra loans price $20 million to Pink Lobster in February, however they weren’t keen to place in more cash with out assist from the proprietor, based on courtroom papers.
Pink Lobster mentioned it’s additionally investigating the shrimp deal, together with the way it was marketed in eating places and if Thai Union “exercised an outsized affect” on shrimp purchases.
The chain employs 34,000 folks within the US and an extra 2,000 in Canada. Final week, it shuttered 93 underperforming shops.
The case is Pink Lobster Administration LLC, 24-02486, US Chapter Courtroom for the Center District of Florida.
–With help from Jonathan Randles.
(Updates with lender particulars in third paragraph.)
Most Learn from Bloomberg Businessweek
©2024 Bloomberg L.P.