The embattled seafood chain is paying bills late and rumored to be considering bankruptcy
Red Lobster abruptly closed some 87 restaurants on Monday as the chain faces apparent cash-flow issues and loss of confidence from its largest owner.
The Orlando-based casual dining seafood chain had 649 restaurants as of the end of 2023, according to Technomic data, meaning it just closed about 13% of all of its restaurants.
USA Today compiled a list of all of the shuttered restaurants listed on the chain’s web site. The closed locations are in 28 states, with the largest number, 16, in its home state of Florida, including three in Orlando.
Auction site Tagex has listed 48 closed Red Lobster locations and has put all of their contents up for sale in an auction scheduled to end on Tuesday. They’re “Winner Takes All” auctions, meaning buyers are bidding on the total contents of each restaurant.
Red Lobster didn’t respond to queries about the closures, but the chain has been struggling for years. Its difficulties were compounded by a $20 all-you-can-eat “Ultimate Endless Shrimp” deal introduced last summer. Seafood supplier Thai Union, which owns a large percentage of the chain, said the loss-leading deal contributed to an $11 million operating loss in the third quarter of last year.
Red Lobster raised the price on the deal to $25 and ultimately changed it to a non-all-you-can-eat “Shrimp Your Way” offering, allowing guests to order two shrimp items for $17, three for $20, and four for $25. One side is included in the deal.
Thai Union, which has long been a large minority shareholder in Red Lobster, said in January it would sell its stake in the company and has reportedly been looking for buyers ever since.
In March, the chain installed restructuring expert Jonathan Tibus as its CEO, and the following month Bloomberg reported that the chain was considering bankruptcy.
Tibus has overseen a number of restaurant bankruptcies, including those of Kona Grill, Krystal, and Quiznos.
Tibus is Red Lobster’s third CEO in two years, and during most of that time the position has been vacant. Kelli Valade stepped down in April of 2022 after just eight months as CEO. She wasn’t replaced until September of 2023, when Horace Dawson, then the chain’s executive vice president and general counsel, took the position. He announced his retirement when Tibus was hired.
Credit report company Creditsafe said Red Lobster has been late in paying its bills more often than not over the past six months. It said that in October and November of 2023 nearly 70% of the chain’s bills were paid late. Although that changed in December when 72% of bills were paid on time, that figure dropped to 3.82% in January and 25.80% in February.
As of March it said Red Lobster’s bills were typically paid 48 days after they were due.
Contact Bret Thorn at [email protected]
Read more about:
Red Lobster
