Red Lobster, the American seafood restaurant chain founded in 1968 and known for its seafood offerings and cocktail lounge atmosphere, is closing at least 87 restaurants temporarily across 27 states. The closures come as Red Lobster reportedly considers filing for bankruptcy protection to restructure debt and shed long-term contracts. Some of the closed locations are being auctioned off through TAGeX Brands, with kitchen equipment, furniture, tables and chairs up for sale.
Red Lobster has experienced financial struggles in recent years. In 2023, the chain reportedly suffered an $11 million quarterly operating loss due to expanding an all-you-can-eat shrimp promotion. The promotion was a tradition at the chain for over 18 years but resulted in unexpected high orders and a significant loss.
Red Lobster's mass closures mark one of the only times in its more than 50-year history that the chain has closed dozens of stores at once. The company, which has around 650 locations, did not respond to requests for comment.
The explosive growth and popularity of fast-casual chains like Chipotle and quick-service chains like Chick-fil-A over the past two decades squeezed Red Lobster and the casual dining sector. Casual dining has slipped from 36% of total restaurant industry sales in 2013 to 31% in 2024, according to Technomic, a restaurant research firm.
Red Lobster was once a pioneer in bringing affordable seafood to middle-class consumers. However, the chain has declined due to corporate mismanagement and other factors. In 2020, Thai Union, a longtime supplier to Red Lobster, took an undisclosed financial stake in the chain and became a key shareholder.
Under Thai Union's direction, Red Lobster cycled through four CEOs and implemented an all-you-can-eat shrimp deal that slowed down table service and cut into Thai Union's profitability. The promotion was eventually made a permanent fixture on the menu, but it resulted in unexpected high orders and a significant loss for the company.
Red Lobster locations temporarily closed include those in Alabama, Arizona, California, Colorado, Florida, Georgia, Idaho and other states. Some of these locations are being auctioned off through TAGeX Brands.
