Red Lobster Closes 24 More Restaurants After 100 Shut Down Post-Bankruptcy

Red Lobster is facing further challenges as it prepares to close more of its locations amid ongoing financial struggles. The seafood restaurant chain, which filed for bankruptcy earlier this year, has recently announced plans to shut down 23 additional restaurants, according to a court filing. This follows the closure of over 100 Red Lobster locations this year alone.

Once these closures come to an end, Red Lobster will be operating approximately 500 restaurants, a significant reduction from the 650 it had a year ago, as reported by CNN.

As part of its bankruptcy proceedings, Red Lobster is actively seeking a buyer for the chain. Fortress Credit Corp, a lender that also owns Logan’s Roadhouse and J Alexander’s, is expected to take over the brand. The company announced its intention to appoint former PF Chang’s CEO Damola Adamolekun as Red Lobster’s new CEO once the bankruptcy process is finalized. Adamolekun led the Chinese dining chain for four years before his departure in August 2023.

In the fall, Red Lobster experienced financial losses amounting to $11 million due to its Ultimate Endless Shrimp promotion, which offered an all-you-can-eat shrimp option for $20. Ludovic Garnier, the chief financial officer of Thai Union Group, which was a former co-owner of Red Lobster, reflected on the promotion during an investor earnings call, stating, “We knew the price was cheap, but the idea was to bring more traffic into the restaurants.”

While the promotion succeeded in attracting patrons, customers opted for the $20 deal at a larger rate than anticipated. “We don’t earn a lot of money at $20,” Garnier pointed out, noting that for the first nine months of 2023, Thai Union Group incurred a $19 million loss linked to its stake in Red Lobster.

In January, Thai Union Group disclosed its decision to terminate its minority investment in Red Lobster. CEO Thiraphong Chansiri indicated that factors such as the pandemic, evolving industry trends, and rising operating costs influenced their choice, leading to enduring negative financial impacts on both Thai Union and its shareholders.

Thai Union Group initially invested in Red Lobster in 2016 and increased its stake in the chain in 2020.

Overall, the restaurant industry has been grappling with significant challenges in 2023, primarily driven by inflation. With rising costs, many Americans are reassessing their spending habits, including dining out. This shifting landscape has pushed many struggling restaurants closer to the edge, resulting in nearly 3,200 store closures across the country in 2024.

Earlier this year, Applebee’s announced plans to shut between 23 to 35 locations, while Hooters also indicated it would close numerous underperforming restaurants.

Fast food establishments haven’t been immune to these trends either. A recent survey conducted by LendingTree, which included 2,000 American adults, revealed that nearly 80% of respondents now consider fast food a “luxury” due to escalating meal prices. Notably, half of those surveyed indicated financial strain contributes to this perception of fast food as a luxury. Among Americans earning less than $30,000, 71% regarded it as a luxury, along with 58% of parents with young children.

In response to these economic pressures, major fast food brands like Burger King, McDonald’s, and Taco Bell have introduced low-cost value meal options, though results have varied.