Bankrupt seafood chain Red Lobster has appointed former PF Chan CEO Damola Adamolekun to take over the reins of the struggling chain and said it will close 23 more restaurants by the end of the week, according to a court filing on Monday.
Red Lobster, which blamed its $20 all-you-can-eat shrimp promotions for its financial troubles before filing for Chapter 11 bankruptcy protection in May, is awaiting court approval for a takeover by new lenders led by investment management firm Fortress.
Fortress, co-founded by billionaire and Milwaukee Bucks co-owner Wesley Eden, will set up a newly formed company called RL Investor Holdings to buy Red Lobster out of bankruptcy.
Adamolekun, who retires as president of PF Chanz in 2023, will remain as CEO of RL Investors until the sale is completed, expected next month, the company said.
“I look forward to working with our team members across North America to revitalize the brand by creating the best work environment for our employees and enhancing the experience for our guests,” Adamolekun, 35, said in a statement.
Orlando, Florida-based Red Lobster abruptly closed more than 100 restaurants before filing for bankruptcy, but Fortress said its 544 restaurants in 44 states and four Canadian provinces will continue to operate as an independent company.
The casual dining chain, which was founded in 1968, has struggled to stay afloat due to consumer spending cuts and high inflation.
Thai Union Group, a Thailand-based seafood supplier, became Red Lobster’s largest shareholder in 2020.
Although the conglomerate had promised not to interfere in Red Lobster’s day-to-day operations, Thai Union representatives held top positions at the company’s headquarters and became heavily involved in the restaurant business.
It was reported that there was high turnover and it created a toxic work environment. According to a CNN report:.
The company has had five CEOs in Thai Union’s five years.
The seafood group sold its stake in Red Lobster after the chain posted huge losses earlier this year.
Thai Union did not immediately respond to a request for comment.
Fortress Investment Group, a $48 billion private equity firm, has bought other bankrupt companies, including Crystal Restaurants and Logan’s Roadhouse.
Adamolekun served as CEO of PF Chanz from 2020 to 2023. Prior to assuming his executive role, he served as a director of the company.
Under Adamolkun’s helm, the Asian fusion chain reported U.S. sales of $994.3 million last year, down slightly from the previous year but up from pre-pandemic levels, according to market research firm Technomic.
Adamolkun is credited with helping PF Chang’s leverage its takeaway service and expand its stores across the country.
