What Happened: Red Lobster has filed for Chapter 11 bankruptcy protection, aiming to reduce its number of locations and find a buyer.The seafood chain has a stalking horse bid from its lenders to purchase the company unless a higher bid emerges, according to CNBC. The outlet reported last month that Red Lobster was seeking a buyer due to significant debt and long-term leases.

The bankruptcy filing underscores the broader challenges faced by the restaurant industry. According to Yahoo Finance, the company cited higher labor costs, escalating rents, and its "Ultimate Endless Shrimp" deal as significant factors contributing to its financial woes.

Recently, the company appointed restructuring expert Jonathan Tibus as CEO. Tibus cited a challenging macroeconomic environment, underperforming locations, failed strategic initiatives and increased competition as reasons for the bankruptcy filing.

Red Lobster operates 551 U.S. locations and 27 in Canada. It closed 93 underperforming locations on May 13 and seeks to reject 108 leases to further reduce its footprint. The company employs 36,000 people, mostly part-time.

Based in Orlando, Florida, Red Lobster has assets and liabilities estimated between $1 billion and $10 billion. Its largest creditor, Performance Food Group, says the company owes $24.4 million.

Darden Restaurants (DRI  ) once owned Red Lobster brand, but spun it off years ago. Red Lobster's bankruptcy could be a sign of things to come for Darden's other restaurants like Olive Garden if they are unable to adapt to a consumer environment that isn't as friendly to sit-down chain restaurants.

In a statement, Tibus said, "This restructuring is the best path forward for Red Lobster." He emphasized the support from lenders and vendors to complete the sale process efficiently while focusing on employees and guests.