Economics

Red Lobster, which brought affordable shrimp and lobster to middle-class America and grew to become the largest seafood restaurant chain in the world, has filed for bankruptcy.

The company said it had more than $1 billion in debt and less than $30 million in cash on hand. It plans to sell its business to its lenders, and in turn, it will receive financing to stay afloat. It expects to continue to close restaurants in the meantime.

Red Lobster, known for its cheddar bay biscuits, crab legs and shrimp dishes, spread around the country during the 1980s and 1990s. In 2016, Beyoncé mentioned Red Lobster in her song “Formation,” describing bringing a romantic partner to Red Lobster, causing sales to surge.

With 578 restaurants across 44 states and Canada, Red Lobster serves 64 million customers a year, and it brings in $2 billion in annual sales, the company said in its bankruptcy filing. One in five lobster tails purchased in North America is bought by Red Lobster.

But recent mismanagement, competition, inflation and other factors brought down Red Lobster, analysts and former Red Lobster employees say.

Years of underinvestment in Red Lobster’s marketing, food quality, service and restaurant upgrades hurt the chain’s ability to compete with growing fast-casual and quick-service chains.