Red Lobster quietly closed dozens of locations of the popular seafood chain restaurant across the Untied States on Monday, May 13, amid the chain's ongoing financial woes. And the company is likewise auctioning off equipment from the shuttered restaurants.
The news comes just a month after a report broke that Red Lobster was considering filing for Chapter 11 bankruptcy in an effort to restructure mounting debts. In addition to increased labor and operating costs, the chain also took a hit last year after making its popular Ultimate Endless Shrimp promotion a permanent part of its menu. Last November, parent company Thai Union Group said that Red Lobster was on track to take a $20 million loss for the year as a result.
Leading restaurant liquidator TAGeX Brands, which is facilitating the auction, listed nearly 50 locations on its website that are participating in the auction. However, according to Restaurant Business reporter Joe Guszkowski, that number may be closer to 100; or about 15 percent of the company's approximately 700 locations. Still, Red Lobster still remains the largest seafood restaurant chain in the U.S.
Update: Red Lobster's website says 99 locations are closed. That's 15% of the chain. https://t.co/9siI61njcb
— Joe Guszkowski (@JoeGuszkowski) May 14, 2024
TAGeX Brands CEO and founder Neal Sherman explained the details of the auction in a LinkedIn post, calling it the company's largest restaurant liquidation ever.
"The furniture, fixtures, and equipment from select Red Lobster locations MUST GO ASAP!" Sherman wrote. "We're handling this closure differently than we have in the past with each auction having a SINGLE winner for the listed items from the location they bid on—WINNER TAKES ALL."
Back in January, Thai Union Group Plc. which has been in control of Red Lobster since 2021 when it took over majority stake from Golden Gate Capital, announced its intention to pursue an exit of its minority investment. The company was hoping to find a buyer to avoid a bankruptcy filing, but so far haven't had any bites.
"The combination of Covid-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders," Thai Union Group’s CEO Thiraphong Chansiri said in a statement.
"After detailed analysis, we have determined that Red Lobster’s ongoing financial requirements no longer align with our capital allocation priorities and therefore are pursuing an exit of our minority investment," Chansiri added.
It's unclear whether the liquidation will help keep the chain afloat for now. In the meantime, Men's Journal has reached out to the company for comment.
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