Erie, Pa. (WJET/WFXP) — Less than one week after Red Lobster closed more than 93 locations nationwide, the company officially filed for Chapter 11 bankruptcy late Sunday night.

Currently, the company is not planning to close other locations and hopes to keep business operating as usual.

According to court documents, the company currently holds an estimated $1 billion to $10 billion in liabilities to over 100,000 creditors. Multiple factors led to the company filing for bankruptcy including inflation, operational missteps, and underperforming locations.

Inflationary pressure has caused menu prices to rise significantly faster than grocery and other consumer prices. This leads to customers being less inclined to eat out. Another source of pressure noted was the recent increase of minimum wages in 50% of states and wages have outpaced the restaurant industry’s ability to increase prices.

Underperforming locations and unfavorable leases added to the liability concerns of the company. Red Lobster currently leases 687 locations, spending $190.5 million in 2024 on these lease obligations. Over $64 million of those obligations were that of underperforming locations.

A key point when people think of Red Lobster’s failure is the Ultimate Endless Shrimp promotion that was held. While meant to only be a limited-time promotion, in May 2023 former CEO Paul Kenny added the promotion as a permanent $20 menu item, despite significant pushback. This decision ultimately cost the company $11 million and burdened supply obligations, creating shortages of shrimp at locations for days and even weeks.

While the company initially recovered from the revenue slump during the COVID-19 pandemic, in just a few years Red Lobster erased any ground recovered after the pandemic, evident after posting a $75 million net loss in 2023.

An attempt to restructure out of court was made before the filing of Chapter 11. The decision was made to close 93 stores nationwide, locations were deemed non-performing because of rent costs and/or financial performance and, ultimately, a burden on the rest of the company. Moving forward the company plans to implement a more sensible promotional calendar with less limited-time offers.

According to court documents, Red Lobster was founded in 1968 and is based in Orlando. Over seven decades Red Lobster has grown to approximately 551 U.S. locations in 44 states, 27 locations in Canada and 27 international locations. As of May 19, 2024, the company’s workforce consists of 36,000 workers, 34,000 based in the United States.

Since 1995, Darden Restaurants, a General Mills Company, owned the brand before it sold Red Lobster to Golden Gate Capital in May 2014. In 2020, Thai Union, former members of Red Lobster management and certain investors under the name Seafood Alliance company, acquired Red Lobster from Golden Gate.