Black Exec Damola Adamolekun Saves Red Lobster. Popular Seafood Restaurant Chain Emerges from Bankruptcy

When Damola Adamolekun came in as CEO of Red Lobster last month, the longtime national seafood chain was in deep financial trouble. In fact, it was in bankruptcy. Now comes news the chain has emerged from Chapter 11 bankruptcy.

Adamolekun replaced the previous CEO, Jonathan Tibus, as part of the company’s restructuring plan, according to USA Today.

About Adamolekun

Adamolekun, known for his tenure at P.F. Chang’s, was appointed to guide Red Lobster through a challenging period and help stabilize the brand under its new ownership structure.

Adamolekun, a 35-year-old Nigerian entrepreneur, is now leading the seafood chain with over 500 locations. And he seems to have already turned the company around from the brink.

Adamolekun made his mark as a partner at private equity firm TPG, where he helped oversee investments in various restaurant brands, including P.F. Chang’s, where he also served as CEO.

He is recognized for his forward-thinking and innovative leadership, especially at P.F. Chang’s, where he spearheaded strategic changes by revamping dining rooms, updating menus to align with market trends, and introducing delivery and to-go options. These initiatives contributed to a 31.7 percent sales increase in 2021 during the pandemic, according to The Q Gentleman.

Now at Red Lobster, Adamolekun aims to replicate his past success and help the chain navigate the challenges of the competitive restaurant industry after emerging from Chapter 11 bankruptcy protection.

In May, Red Lobster closed 100 underperforming locations and filed for Chapter 11 bankruptcy. Under Chapter 11 plan, in a $376 million bid Red Lobster was acquired by RL Investor Holdings LLC, an entity backed by Fortress Investment Group.

Fortress Investment Group anticipates that the chain will achieve positive net income by 2026, marking a significant turnaround from recent financial difficulties.

What Went Wrong

Red Lobster’s bankruptcy filing shed light on how a poorly conceived “endless shrimp” promotion contributed to its downfall. Initially a successful limited-time offer, the promotion became a permanent menu item last summer under the direction of Thai Union, the seafood giant and major shareholder since 2020, CNN reported. The decision, driven by a desire to offload excess shrimp inventory, eventually cost the chain $11 million and strained its operational efficiency.

Even more critical to the company’s balance sheet was a sale-leaseback arrangement it entered in 2014 under a previous owner, Golden Gate Capital. When Golden Gate bought the chain its real estate was sold to another company, American Realty Capital Properties, for $1.5 billion, whereupon the restaurants began renting from ARCP at rates that rose some 2 percent a year. Restaurant Dive reports that last year those rents cost Red Lobster $190 million.

Those missteps, combined with years of neglect in marketing and a failure to adapt to younger consumers, ultimately hurt the chain. Fast-casual competitors like Chipotle also siphoned off diners, causing further declines.

Now it seems the icon chain is back on good footing.