Dive Brief:
- Fortress Investment Group, which is seeking approval to acquire Red Lobster out of bankruptcy, appointed Damola Adamolekun as the next top executive of RL Investor Holdings, the company said Monday in an email.
- Upon court approval of Red Lobster’s Chapter 11 plan and the acquisition, Adamolekun, who previously served as CEO of P.F. Chang’s for about four years, will officially become CEO of the reorganized company.
- Adamolekun will replace Jonathan Tibus, who has been CEO since March and has led the company through its ongoing bankruptcy and restructuring.
Dive Insight:
In its bid to revive the embattled Red Lobster brand, Fortress has chosen an executive with experience leading a major restaurant chain through adversity.
During his tenure at P.F. Chang’s, Adamolekun helped the chain navigate through COVID-19 dining room closures and opened smaller, off-premise-only P.F. Chang’s To Go locations.
His work experience also includes a period serving as chief strategy officer at P.F. Chang’s and as partner at Paulson & Co., a New York-based investment firm and principal owner of P.F. Chang’s.
“We’re excited to bring Damola on board to drive our investment plan for Red Lobster,” said Morgan McClure, managing director at Fortress. “Fortress has a strong track record of operating and improving iconic American restaurants, and Damola’s energy, leadership and experience will be key to restoring Red Lobster’s status as an iconic and admired American brand.”
The restructured company will also shed 23 locations by the end of this month. The decision came after it performed a review of its locations with the help of a real estate advisor to identify restaurants that would continue to suffer losses, according to a court document filed last week.
In May, the chain closed about 100 underperforming locations and filed for Chapter 11 bankruptcy. In July, Fortress Investment Group said it would acquire the chain for $376 million in an equity transfer.
Red Lobster’s lease rejection plan is “centered on value maximization,” the court filing stated. Fortress said it expects the chain to reach positive net income by 2026.
Rental costs contributed significantly to Red Lobster’s years of losses. In 2014, then-owner Golden Gate Capital sold the chain’s real estate in a sale-leaseback deal for over $1.5 billion. The chain thereafter needed to pay rent that was expected to increase by 2% each year. In 2023, the chain’s rent cost rose to over $190 million, including $64 million for underperforming restaurants. Last year the brand reported $76 million in net losses.
