A Wall Street investment firm run by billionaire Milwaukee Bucks co-owner Wesley Edens could step in to save Red Lobster from bankruptcy, according to reports.
Fortress Investment Group, a $48 billion private equity firm that specializes in restructuring distressed companies, is the most likely to take over the embattled casual-dining chain as it seeks to emerge from Chapter 11 bankruptcy. According to Bloomberg News.
Executives at Fortress, founded by Edens, Rob Kaufman and Randall Nardone, are scrutinizing Red Lobster’s financial statements to try to understand why the company’s restaurants are failing, Bloomberg News reported.
Fortress, which already holds most of Red Lobster’s debt, is also reportedly developing a strategy for the restaurant chain’s revival by identifying which geographies and customer demographics would be most conducive to a resurgence in popularity.
According to Bloomberg News, Edens’ company is particularly keen to get rid of onerous leases that have put a big dent in Red Lobster’s profits.
The Post has reached out to Fortress and Red Lobster for comment.
Wesley Edens is the father of Mallory Edens, an internet personality who was reported to have been romantically involved with New York Jets quarterback Aaron Rodgers.
Last month, Red Lobster, which once boasted 550 locations, filed for Chapter 11 bankruptcy protection after closing 93 locations.
Court documents say the company is at risk of closing 135 more stores if it cannot renegotiate the terms of its leases.
The filing lists 228 rejected lease agreements that the company warned would result in losses if continued without adjustments. According to Restaurant Business.
Shortly after the bankruptcy filing, The Washington Post reported that Red Lobster was working to keep its Times Square restaurant open.
SL Green and RXR, which own the 5 Times Square property, are looking to double rental income from the restaurant from just under $1 million a year to $2.2 million, according to real estate brokers who spoke to The Washington Post.
Red Lobster was offering a limited-time promotion for $20 all-you-can-eat shrimp.
Former CEO Paul Kenny made it a permanent option for the year in May 2023, despite “significant opposition” from other executives, according to the document.
Some Red Lobster restaurants soon faced severe shrimp shortages.
During the same period, the company eliminated two breaded shrimp suppliers, leaving Thai Union with an exclusive contract, which led to higher costs, current CEO Jonathan Tibbs said in the filing.
“Thai Union exerted significant influence over the company’s shrimp purchases,” Tibs wrote. “The Debtors are currently investigating the circumstances surrounding these decisions.”
Red Lobster, which is $294 million in debt, plans to close some of its underperforming restaurants and sell the rest to a group of lenders that includes Fortress Investment Group.
Red Lobster, based in Orlando, Florida, is one of the world’s largest seafood restaurant chains, with 54 stores outside the United States and approximately 36,000 employees.
The company buys 20 percent of North American lobster tails and 16 percent of the lobsters sold worldwide, according to the filing.
Red Lobster said its business has been hurt by poor management decisions, high inflation, unsustainable rents and increased competition.
The company forecast a net loss of $76 million for 2023.
With post wire
