Red Lobster’s suppliers are being paid 48 days past their due dates.
Red Lobster submitted late payments for nearly 70 percent of its bills in October 2023, around 66 percent of its bills in November 2023, and 27.8 percent in December 2023, according to FSR Magazine.
The company’s bill payments “significantly worsened” in January and February 2024, according to FSR, with 96.18 percent of bills being paid past their due dates in January – a month which saw the struggling company typically paying suppliers 26 days past the due date – and 74.2 percent of bills paid past due in February.
The typical turnaround time in February was 47 days past due, but nearly 60 percent of the restaurant chain’s bills were paid 61 to 90 days late, according to Creditsafe.
In March, Red Lobster typically paid suppliers 48 days past the due date, the credit reporting firm Creditsafe found.
“Just imagine how that could affect the restaurant chain’s suppliers. If they have net 60 or net 90 payment terms, it could be well over four months before they see their first invoice paid by Red Lobster,” Creditsafe said, according to FSR. “It’s also worrying that the company’s DBT has been so volatile and spiked drastically multiple times. This shows the company may not have done the necessary cash flow forecasting to protect itself from potential losses, revenue declines, and challenging market conditions.”
Creditsafe did not respond to SeafoodSource’s request for additional information.
On 16 April 2024, Bloomberg reported the beleaguered seafood restaurant chain was exploring a bankruptcy filing. But, CNBC reported the Orlando, Florida, U.S.A.-based operator of around 650 restaurants is seeking a buyer to avoid bankruptcy. At least one firm had been interested in buying the chain, but a deal never came to fruition, it said.
A Chapter 11 bankruptcy filing would allow Red Lobster to “shed some long-term contracts and renegotiate “a swath of leases,” Bloomberg reported.
In January, Thai Union announced it would pursue an exit from its strategic partnership and minority investment in Red Lobster Master Holdings. Thai Union first invested in the restaurant chain in 2016 and increased that investment in 2020.
In August 2020, Thai Union looked into refinancing Red Lobster’s loans, negotiating reduced rent from landlords, and closing some locations after the restaurant chain posted record losses, but those efforts ultimately failed to rehabilitate the restaurant chain.
