In a significant move reflecting the financial challenges faced by the seafood restaurant industry, Red Lobster announced Tuesday it’s closing several of its locations across the country.
Red Lobster revealed that it will auction off more than 50 of its restaurants. The auction will be managed by TAGeX Brands, a company specializing in restaurant liquidations, which described this event as its “largest restaurant equipment auction ever.”
California and Florida are among the hardest hit, with five closures each, followed by Colorado and Maryland, each facing four closures. TAGeX Brands said the auctions will operate on a winner-take-all basis, meaning successful bidders will acquire all contents of the respective Red Lobster locations.
The closures are part of a broader strategy by Red Lobster to address financial pressure.
Last month, the company announced it was contemplating bankruptcy, reportedly in part because of a record $11 million loss last year that the seafood restaurant partly blamed on its promotional offer of unlimited shrimp.
Experts familiar with the situation indicate that Red Lobster might pursue a Chapter 11 bankruptcy protection filing, the Daily Mail reported. The legal maneuver would facilitate the restructuring of the company’s debt, letting the chain terminate enduring contracts and enter into negotiations for new leases under more favorable terms.
The restaurant’s famous $20 Ultimate Endless Shrimp promotion — created as a short-term offer that became permanent — came after the company lost $5.4 million in the second quarter of 2023. The promotion was successful in bringing in diners, especially after the deal went viral on social media platforms. But those customers overwhelmed the restaurant with shrimp demand, contributing to millions in losses.
• Staff can be reached at 202-636-3000.