Red Lobster is closing another 23 restaurants.
Red Lobster is closing another 23 locations across the U.S., deepening its ongoing bankruptcy troubles. The closures are set to take place by Saturday, August 31, 2024, following a recent court filing. This move adds to the over 100 restaurants already shut down earlier this year, reducing the chain’s footprint from 650 last year to about 500 locations by the end of this month.
The seafood giant has struggled to stay afloat in a highly competitive market, facing challenges like inflation, mismanagement, and stiff competition from other casual dining establishments. A crucial factor in the downfall has been poor decisions, such as the ill-fated “endless shrimp” promotion, which became a permanent menu item. The deal, intended to draw in more customers, ended up costing Red Lobster millions, with the chain losing $11 million on that promotion alone.
Red Lobster’s primary shareholder, Thai Union, a global seafood supplier, has also faced criticism for its role in the company’s decline. After acquiring a controlling stake in 2020, Thai Union made several operational changes that did not sit well with long-time executives and employees. The company cut ties with long-standing suppliers and implemented cost-cutting measures that some believe damaged the brand’s reputation and profitability.
In May 2024, Red Lobster filed for Chapter 11 bankruptcy protection. Part of its restructuring plan involves selling the company to Fortress Credit Corp., a firm with experience in the restaurant industry. Fortress, which already owns chains like Krystal, Logan’s Roadhouse, and J. Alexander’s, extended a $100 million loan to keep Red Lobster running during the bankruptcy process.
Fortress has also named Damola Adamolekun, former CEO of P.F. Chang’s, as the future leader of Red Lobster once the bankruptcy proceedings are complete. Adamolekun is expected to help turn around the struggling seafood chain after he officially takes the helm in the coming months. He brings experience from his four-year tenure at P.F. Chang’s, where he oversaw the revitalization of the brand.
The closure of the 23 additional locations is a critical step in Red Lobster’s efforts to reduce losses and streamline operations. According to the court filing, the company identified these locations as ones that would “continue to drive losses” and “are not needed to operate the business going forward.” The closures are expected to help stabilize the company’s finances, although the road to recovery remains uncertain.
Despite the store closures and operational shakeups, Red Lobster remains a beloved brand among seafood lovers, and the company hopes to retain its loyal customer base during this tumultuous time. However, the chain’s future will largely depend on its ability to recover from the financial setbacks, restructure its business model, and regain consumer trust.
Red Lobster’s journey from a once-dominant force in casual dining to its current financial struggles has been a harsh reminder of how quickly the industry can shift. With changing consumer preferences, increased competition, and the lingering effects of inflation, many traditional chains have been forced to adapt or close their doors.
The closures will likely have a significant impact on employees and communities where these restaurants operate. With each location employing dozens of staff, the loss of 23 more restaurants adds to the number of jobs at risk in an already challenging labor market for the food service industry.
As the August 31 deadline approaches, many Red Lobster customers are reacting with sadness and frustration. Some have expressed their disappointment on social media, noting the nostalgic significance of the brand, while others are worried about finding a replacement for their favorite seafood spot.
For now, Red Lobster’s leadership team, under the guidance of Fortress and its new CEO, will focus on stabilizing the remaining 500 locations and crafting a strategy that will keep the company alive. Whether this marks the beginning of a successful recovery or the end of an era for Red Lobster will be determined in the coming months. The seafood chain’s story is far from over, but the next chapter may be one of the most challenging in its history.
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