Red Lobster May Close 100 More Locations, New Document Reveals
Between a long-anticipated bankruptcy filing and dozens of abrupt restaurant closures, it would be an understatement to say that the past few weeks have been rough for Red Lobster. Unfortunately, new court documents reveal the seafood chain may not be past the worst of its financial woes just yet.
Bankruptcy filings submitted last week hinted that more than 100 Red Lobster locations could close in addition to the nearly 100 restaurants shuttered in May. Per Restaurant Business Magazine, the documents listed 228 rejected restaurant leases that Red Lobster says will continue losing money if they keep operating as they do now.
The list included at least some of the restaurants that closed their doors last month, indicating that the list's remaining 100+ locations could be at risk of meeting the same fate.
Among the restaurants mentioned in the list of rejected leases was Red Lobster's massive Times Square restaurant. The New York Post reported last week that the location's landlords are increasing the annual rent to $2.2 million, more than double what Red Lobster is currently believed to be paying. Red Lobster is currently in negotiations with the landlords ahead of the lease expiring on June 30, according to the publication.
Red Lobster did not immediately respond to our queries for comment on the additional closures reports.
While media reports had been hinting at a possible Red Lobster bankruptcy since mid-April, the chain officially announced a Chapter 11 bankruptcy filing on May 19. The massive seafood chain has struggled in recent years from elevated food and labor costs, underperforming restaurant closures, and significant operating losses, particularly during its ill-fated Ultimate Endless Shrimp promotion that returned last June.
Red Lobster's owner, the Thailand-based seafood producer Thai Union Group, announced plans to divest from the chain in January due to its "prolonged negative financial contributions." But even Thai Union President and CEO Thiraphong Chansir admitted during a February earnings call that they're "not expecting to get anything much from the sale."
The Chapter 11 bankruptcy filing will allow Red Lobster to continue operations while it sells off most of its assets and works to improve the business.
"This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth," CEO Jonathan Tibus said in a statement on May 19. "The support we've received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests."
Red Lobster currently operates 570 locations throughout the United States, per Restaurant Business Magazine.
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