Red Lobster, the largest seafood restaurant chain in the world, has filed for Chapter 11 bankruptcy in Florida. The filing comes after the company abruptly closed dozens of stores across the country and listed 99 locations as temporarily closed on its website. Some of these locations have had their kitchen equipment auctioned off on a restaurant liquidator's site.
The reason for Red Lobster's financial struggles is believed to be its $20 endless shrimp promotion, which became a permanent menu item in 2023. This decision cost the company an operating loss of $11 million in Q4 2023, as customers consumed large amounts of shrimp.
Thai Union Group, a Bangkok-based canned seafood company that owns 49% of Red Lobster since 2020, saw an opportunity to grow its business by investing more financially in the chain and providing it with exclusive shrimp supply. However, this arrangement led to burdensome supply obligations for Red Lobster.
Red Lobster's bankruptcy filing also details how the company has struggled with underperforming restaurant footprint, bloated strategic initiatives, failed strategic initiatives, increased competition within the restaurant industry, and a macroeconomic environment that was not favorable to the casual dining industry.
Despite these challenges, Red Lobster remains committed to using bankruptcy proceedings to drive operational improvements and pursue a sale of substantially all of its assets. The company intends to continue operating its restaurants during this process.
Red Lobster's closings have left many loyal diners wondering about the future of their favorite seafood chain. Some superfans, however, have taken matters into their own hands by bidding on equipment from closed locations in an attempt to acquire sentimental items or even entire restaurants.
