Red Lobster’s struggles continue as the seafood chain announces the closure of another 23 restaurants across the United States. These closures, impacting multiple states, come as part of a cost-cutting measure as Red Lobster grapples with financial challenges. Will your local Red Lobster be on the chopping block? Read on to find out the details of the closures and what it mean for the future of the iconic seafood establishment.
Red Lobster’s New Wave of Closures
According to a filing submitted on August 22nd, Red Lobsters’ new round of restaurant closures includes several locations in Florida, Illinois, and Virginia, as well as in Arkansas, Arizona, California, Colorado, Georgia, Indiana, Minnesota, Missouri, New York, North Carolina, Ohio, and South Carolina.
Red Lobster, which currently operates over 530 restaurants primarily in the U.S. and Canada, has closed more than 100 locations since filing for bankruptcy in May 2024. As stated in the recent filing obtained by People, the Orlando-based company has been reviewing leases for properties that are expected to “continue to drive losses” based on an evaluation focused on “value maximization.” The filing further indicates that Red Lobster does “not anticipate needing” the 23 identified restaurants “to operate their business going forward.”
In a previous round of closures, TAGeX Brands CEO Neal Sherman revealed in a LinkedIn post that his company was responsible for liquidating the restaurant’s assets through auctions. He noted that these auctions represent the company’s “largest restaurant liquidation ever,” encompassing furniture, fixtures, and equipment.
Reasons Behind Red Lobster’s Bankruptcy
Red Lobster filed for voluntary Chapter 11 bankruptcy on May 19th, 2024. At the time, the company had over 100,000 creditors and estimated assets between $1 billion and $10 billion, according to the Associated Press.
Multiple factors contributed to Red Lobster’s bankruptcy, including mismanagement, increased competition, declining customer traffic, and rising food and labor costs. The chain’s financial woes were evident in recent years, with losses of $33 million in 2022, $11 million in the third quarter of 2023, and $12.5 million in the fourth quarter of 2023.
In a significant blow to Red Lobster, its parent company, Thai Union Group Plc, announced in January 2024 that it would be divesting its stake due to the chain’s negative financial impact. Thai Union, a global seafood supplier, became Red Lobster’s leading shareholder in 2020. Under Thai Union’s ownership, Red Lobster’s corporate culture reportedly deteriorated, and the company implemented cost-cutting measures that negatively affected its operations. These measures included removing long-time suppliers and introducing strategies, such as making $20 endless shrimp a permanent menu item, that ultimately proved unsuccessful.
The Controversial Red Lobster’s Ultimate Endless Shrimp Deal
Red Lobster’s Ultimate Endless Shrimp Deal was a popular all-you-can-eat promotion that offered customers a variety of shrimp dishes for a fixed price. Initially priced at $20, the deal was later increased to $25 due to the restaurant chain’s financial struggles.
Customers could choose from a selection of breaded and unbreaded shrimp dishes, ordering up to three at a time and refilling their plates as often as they desired. The deal also included a side dish and Red Lobster’s signature Cheddar Bay Biscuits.
While the Ultimate Endless Shrimp Deal was well-received by customers, the restaurant chain reportedly lost $11 million on this promotion.
In its bankruptcy filing, Red Lobster expressed concerns about the decision to implement the Ultimate Endless Shrimp Deal under Thai Union’s leadership. The company suggested that the promotion might have been improperly executed to benefit Thai Union rather than Red Lobster. However, Thai Union has dismissed these accusations as “meritless.”