With innovations like popcorn shrimp and “endless” seafood offers, Red Lobster, the casual dining restaurant that popularized seafood, has filed for Chapter 11 bankruptcy protection.

The 56-year-old chain filed late on Sunday following the closure of numerous locations.

“Red Lobster’s best course of action in the future is this restructure. CEO Jonathan Tibus stated, “It enables us to overcome multiple operational and financial obstacles and come out stronger and refocused on our growth.” Expert in corporate reorganization, Tibus assumed the company’s senior position in March.

Red Lobster Seeks Bankruptcy Protection Days After Closing Dozens Of Restaurants

Red Lobster announced that its restaurants will stay open during the bankruptcy process, which aims to streamline operations, close locations, and explore a sale. As part of the filing, Red Lobster entered into a “stalking horse” arrangement, which means it intends to sell the company to a company created and managed by its lenders.

According to Aaron Allen, the founder of the restaurant consulting business Aaron Allen & Associates,s bankruptcy was the result of two decades of problems for the company. The company has faced rising competition from quicker-moving, less expensive restaurants like Panera and Chipotle.

Red Lobster occasionally drops its prices to compete, a frequently catastrophic strategy. When crab prices increased in 2003, the company lost millions of dollars on an all-you-can-eat “Endless Crab” campaign, according to Allen. Twenty years later, the chain repeated the same strategy with an “Ultimate Endless Shrimp” campaign.

“It’s an interesting case study in corporate food service that they would have this kind of corporate amnesia,” Allen remarked.

He claimed it saw greater success after Red Lobster rebranded itself as an upscale eatery in the middle of the 2000s. It remodeled stores and increased pricing. However, it continued to face challenges from shifting consumer preferences and growing labor and leasing expenses.

Allen stated, “This slow-moving train wreck has been in motion for the past 20 years.”

Based in Orlando, Florida, Bill Darden started the resturant to lower costs and increase the accessibility of seafood restaurants for families.

Red Lobster Seeks Bankruptcy Protection Days After Closing Dozens Of Restaurants

In 1938, Darden launched The Green Frog in Waycross, Georgia, marking his entry into the restaurant industry. Even though it was against the law then, he dared not separate the restaurant’s guests based on race. Again, he let patrons seat wherever they pleased when he launched the first location in Orlando in 1968.

In 1970, Darden sold it to General Mills, where he remained an executive and continued to operate restaurants. Afterward, General Mills founded Darden Restaurants, which owns Olive Garden and several other brands. In 1995, Darden Restaurants separated from General Mills.

Red Lobster attracted hordes of devotees for meals like lobster linguini and its buttery Cheddar Bay biscuits

Nobody who was born in the world could not enjoy Red Lobster cheddar biscuits. In her memoir “Bossypants,” comedian and actress Tina Fey stated, “Anyone who claims otherwise is a liar and a socialist.”

However, the restaurant needed help to attract younger patrons and stay competitive with other eateries. In 2014, Darden Restaurants sold to a private equity firm. One of the biggest seafood suppliers in the world, Thai Union Group, made its initial investment in Red Lobster in 2016 and increased it again in 2020.

Then, during its “Ultimate Endless Shrimp” promotion last fall, they lost millions of dollars by charging $20 for an all-you-can-eat shrimp feast.

In an earnings call with investors, Thai Union Group’s chief financial officer, Ludovic Garnier, stated, “We knew the price was cheap, but the idea was to bring more traffic in the restaurants.

Garnier reported that restaurant traffic increased as a result of the transaction. However, more customers than Red Lobster had anticipated chose the $20 offer, and “we don’t earn a lot of money at $20,” he said. Thai Union Group reported a $19 million loss from Red Lobster for the first nine months of 2023.

Thai Union Group declared in January that it would sell its minority stake in Red Lobster. According to CEO Thiraphong Chansiri, the COVID-19 epidemic, business challenges, and growing operating expenses have severely impacted the restaurant chain and resulted in “prolonged negative financial contributions to Thai Union and its shareholders.”

Red Lobster Seeks Bankruptcy Protection Days After Closing Dozens Of Restaurants

According to a statement made last week by restaurant liquidator TAGeX Brands, the equipment from more than 50 recently closed Red Lobster locations will be up for sale. As a result of the restaurant closures, which are occurring in over 20 states, Red Lobster’s footprint is being diminished in places such as Denver, San Antonio, Indianapolis, and Sacramento, California.

Allen anticipates that due to the bankruptcy proceedings, 700-restaurant network will decrease by one-third to half. All that many prospective purchasers seek is the chain’s real estate.

He predicted the buyer would likely want to keep Red Lobster the same.

In the court statement, Red Lobster stated that its assets are believed to be between $1 billion and $10 billion, with over 100,000 creditors. The corporation’s liabilities are between $1 billion and $10 billion.

SOURCE – (AP)

A former OpenAI executive who quit earlier this week warned Friday that safety has “taken a backseat to shiny products” at the influential artificial intelligence firm.

Jan Leike, who led OpenAI’s “Superalignment” team with a business co-founder who also left this week, stated in a series of posts on the social media platform X that he joined the San Francisco-based startup because he believed it was the ideal place to conduct AI research.

“However, I have been disagreeing with OpenAI leadership about the company’s core priorities for quite some time, until we finally reached a breaking point,” wrote Leike, who resigned on Thursday.

A Former OpenAI Leader Says Safety Has ‘Taken A Backseat To Shiny Products’ At The AI Company

By training, Leike, an AI researcher, feels there should be a greater emphasis on preparing for the next generation of AI models, including safety and studying the societal consequences of such technology. He stated that developing “smarter-than-human machines is an inherently dangerous endeavor” and that the company “is shouldering an enormous responsibility on behalf of all of humanity.”

“OpenAI must become a safety-first AGI company,” stated Leike, using the shortened term of artificial general intelligence, a futuristic concept of robots that are as generally intelligent as humans or can do many things as well as people.

Open AI CEO Sam Altman responded to Leike’s postings, saying he was “super appreciative” of his efforts to the firm and was “very sad to see him leave.”

A Former OpenAI Leader Says Safety Has ‘Taken A Backseat To Shiny Products’ At The AI Company

Leike is “right, we have a lot more to do; we are committed to doing it,” Altman added, promising to publish a lengthy post in the coming days

The company also stated on Friday that it has disbanded Leike’s Superalignment team, which was formed last year to focus on AI threats, and will integrate the team’s personnel into its research operations.

Leike resigned after OpenAI co-founder and chief scientist Ilya Sutskever announced his departure on Tuesday after nearly a decade with the company. Sutskever was one of four board members who voted to remove Altman last October, only to quickly reinstall him. Sutskever informed Altman that he was fired last November, although he later admitted he regretted doing so.

A Former OpenAI Leader Says Safety Has ‘Taken A Backseat To Shiny Products’ At The AI Company

Sutskever stated that he is working on a new project that is meaningful to him but did not provide further specifics. He will be succeeded by Jakub Pachocki as head scientist. Altman described Pachocki as “also easily one of the greatest minds of our generation” and stated that he is “very confident he will lead us to make rapid and safe progress towards our mission of ensuring that AGI benefits everyone.”

On Monday, OpenAI demonstrated the most recent version of its artificial intelligence model, which can emulate human cadences in vocal responses and even attempt to discern people’s moods.

SOURCE – (AP)

It was previously seen as a viable competitor to Nike. But at the moment, Under Armour, founded by a 23-year-old former collegiate athlete, is struggling to “just do it.”

Instead, the brand championed on the basketball court by Stephen Curry and on the golf course by Jordan Spieth is now struggling — badly — to find its footing in an increasingly competitive and crowded sportswear marketplace for regular people, where younger shoppers are more enamored with newer entrants like Hoka and On running shoes.

Under Armour’s annual sales have been lackluster at best in recent years, and the stock has fallen 88% since its all-time high in 2015. According to industry observers, the company is mired in an uncomfortable mix of challenges, including an identity crisis, many management disputes, neglecting emerging market trends to its harm, and a rapid succession of CEOs.

Under Armour Was A Real Threat To Nike. Now It’s Fighting To Stay Relevant

One of them is the company’s creator, Kevin Plank, who has returned as CEO for the second time after being removed in 2019. Like Starbucks founder Howard Schultz and Disney CEO Bob Iger, Plank seeks to right the ship at Under Armour.

“When Under Armour was growing at 20% or higher, people saw it as a legitimate competitor to Nike,” said David Swartz, senior equities analyst at Morningstar, in an interview with CNN.

“It was like On or Hoka a decade ago. The upstart athletic brand was making significant advances against Nike, the industry’s main brand. People regarded it as a firm that could break through and take Nike’s market share among serious athletes,” Swartz explained. “That actually did happen for a while, but then that didn’t last.”

Plank founded Under Armour in 1996 to provide what the name implies: a protective layer of clothing worn by competitive athletes sweating it out in the heat of the game.

The initial product was “The Shorty,” a fitted T-shirt composed of moisture-wicking fabric that professional athletes could wear beneath their uniforms to stay dry. The famous Under Armour “U” and “A” logo was deliberately placed on the neckline to keep it visible.

The T-shirt finally propelled the brand to the masses after gaining popularity among elite sportsmen immediately. Under Armour went public in 2005 due to the startup’s rapid success. Its early tagline was “Protect This House.”

By 2010, the company had surpassed $1 billion in revenue. Five years later, revenues topped $4 billion. But then the impetus began to ebb.

Prolonged period of discomfort.

Under Armour has struggled for the past eight years, and the situation does not look to improve.

The company announced a corporate restructuring on Thursday, following a 10% drop in North American revenues in the most recent quarter. The corporation has issued a bleak prediction for the current fiscal year, expecting sales to fall 15% to 17%. Layoffs would be part of the attempt to right the ship, although officials did not say how many people would lose their jobs.

Under Armour has launched a $500 million share buyback program to reward shareholders.

During the earnings call on Thursday, Plank stated that he will lead a business reset that focuses on selling fewer but more innovative products to meet the needs of athletes, significantly accelerating product development, refocusing on the men’s apparel category, and reducing product discounts

“We’re just doing too much stuff. There are too many items and projects. To rebuild this brand, we must be laser-focused and prioritize what needs to be done so that our staff know exactly what to do and have a clear definition of success for them,” Plank added.

Under Armour Was A Real Threat To Nike. Now It’s Fighting To Stay Relevant

It cannot be denied that management concerns have plagued the company for years, Swartz stated.

“The company has essentially had five CEOs in the past five years, if you count Kevin Plank twice,” stated Swartz. Plank was announced as CEO again in March, following Stephanie Linnartz’s brief year-long stint.

During the analyst call Thursday, Plank admitted that regular C-suite churn has significantly hindered success.

“With several CEOs and heads of product, marketing in North America over the past half-decade, ongoing turnover of critical leadership has been central to our inability to stay agile and decisive,” he stated.

According to Swartz, “things really started to fall apart” at Under Armour beginning in 2016. A major problem developed when an essential distribution route for the company went bankrupt and closed stores.

Under Armour’s products are mostly offered through athletic goods merchants and department stores, such as Macy’s and Kohl’s, as well as online.

“When Sports Authority declared bankruptcy in 2016, Under Armour suffered greatly. It was a significant customer for the brand, as was Dick’s Sporting Goods,” Schwartz stated.

UCLA sued Under Armour in 2020 after terminating a $280 million sponsorship agreement. The lawsuit claimed that Under Armour was struggling before Covid-19 and used the epidemic as an excuse to withdraw from the agreement.

According to Eric Smallwood, president of Apex Marketing Group, a sports and entertainment organization that examines sponsorships and advertising campaigns, the brand’s long-term celebrity-brand collaborations are performing well.

“Under Armour’s partnership with ‘The Rock’, Dwayne Johnson, has been quite successful. They’ve expanded into the United Football League, which Johnson co-owns,” Smallwood explained. “Their uniforms are Under Armour.”

According to Smallwood, the brand is also making advances in golf, and the Stephen Curry alliance has kept it visible in the basketball world.

Under Armour Was A Real Threat To Nike. Now It’s Fighting To Stay Relevant

In 2013, basketball superstar Stephen Curry, probably the finest shooter in history, notably signed for Under Armour over Nike. Meanwhile, Joel Embiid, the brand’s other prominent NBA star, left Under Armour in 2023, just months after being awarded the league’s most valuable player.

Embiid inked a sneaker contract with Skechers last month. Under Armour reportedly bid strongly for WNBA star Caitlin Clark, who is expected to sign with Nike.

“The bottomline for Under Armour is for the brand to be clear about its identity,” he stated. “Are they a shoe company?” Are they an apparel company? Everyone else eventually replicated their moisture-wicking undershirt. Then, perhaps they experienced an identity crisis. It will come down to determining if they want to expand into a lifestyle brand or stick with performance-based products.

SOURCE – (AP)