Red Lobster says it will soon exit bankruptcy

After months of dozens of restaurant closings and headlines about “endless shrimp” woes, Red Lobster says it will soon exit from Chapter 11 bankruptcy protection.

A U.S. bankruptcy judge on Thursday approved the casual seafood chain’s reorganization plan, which includes a lender group led by asset manager Fortress acquiring the business. The green light arrives under just four months after Red Lobster filed for bankruptcy protection as it pursued a sale, following years of mounting losses and dwindling customers while it struggled to keep up with competitors.

At the time of filing in May, Red Lobster’s leadership shared plans to “simplify the business” through a reduction of locations. The chain, which lost $76 million in 2023, shuttered dozens of its North American restaurants over recent months — both leading up to and during the bankruptcy process. That includes more than 50 locations whose equipment was put up for auction just days before the Chapter 11 petition, followed by additional closures throughout the bankruptcy process.

Red Lobster said Thursday that it expects to operate about 544 locations across the U.S. and Canada upon emerging from bankruptcy. That’s down from 578 disclosed as of May’s bankruptcy filing.

Under terms of the acquisition, which is expected to close by the end of September, the chain will continue to operate as an independent company. Once the deal is finalized, Red Lobster will also get a new CEO — Damola Adamolekun, former chief executive of P.F. Chang’s.

Red Lobster’s purchaser is also providing additional $60 million to help the Orlando, Florida-based chain get back on its feet post-emergence. Known for its affordable seafood and cheddary biscuits, Red Lobster has seen multiple ownership changes over the course of its 56-year history. The brand was founded back in 1968 by Bill Darden, who sold Red Lobster to General Mills in 1970. General Mills later went on to form Darden Restaurants, which owns Olive Garden and other chains. Darden Restaurants was spun off from General Mills in 1995.

30-year mortgage rate holds steady

The average rate on a 30-year mortgage in the U.S. was flat this week ahead of an expected interest rate cut from the Federal Reserve later this month.

The rate remained at 6.35% from last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 7.12%. Before last week, the last time the average rate was this low was May 11, 2023.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, eased a little this week. The average rate fell to 5.47% from 5.51% last week. A year ago, it averaged 6.52%, Freddie Mac said.

Stocks fall, bonds rise after weak ADP report

Stocks fell and bonds rose after a fresh reading on the labor market showed further signs of cooling. US companies added the fewest jobs since the start of 2021 in August.

Private payrolls increased 99,000 last month, according to the ADP Research Institute in collaboration with Stanford Digital Economy Lab. The median estimate in a Bloomberg survey of economists called for a 145,000 gain.

This coming Friday, the August jobs report is expected to show payrolls in the world’s largest economy increased by about 165,000, based on the median estimate in a Bloomberg survey of economists. While above the modest 114,000 gain in July, average payrolls growth over the most recent three months would ease to a little more than 150,000 the smallest since the start of 2021. The jobless rate probably edged down in August, to 4.2% from 4.3%.

Compiled from Associated Press and Bloomberg reports.