Red Lobster, which is owned by the Thai Union Group and is the largest seafood chain in the world, is facing the possibility of closing over 135 additional restaurants due to issues related to lease agreements with its landlords.
The company has already closed over 93 of its 580 restaurants across 27 US states on May 13. In response to its financial struggles, the Orlando-based company has filed for Chapter 11 bankruptcy protection and is hoping to restructure its finances and negotiate new leases in order to avoid further closures.
The company acknowledged in its bankruptcy filings that it had “a bloated and underperforming restaurant footprint.”
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Red Lobster has attributed its recent financial struggles to various factors including poor management, increased competition, inflation, lease and labor costs, and a failed promotion called the “Endless Shrimp.” This promotion, launched last summer, resulted in an operating loss of over $11 million in the third quarter. As a result, the company raised the price of the deal from $20 to $25.
According to bankruptcy filings cited by Restaurant Business, an additional 135 Red Lobster restaurants are at risk of facing financial losses and potential closure if the current lease agreements remain unchanged. The company has a limited time to negotiate and reach new lease terms with landlords, particularly for its restaurant in Times Square, as the current lease is set to expire on June 30.
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In 2016, the Thai Union Group made its initial investment in Red Lobster and later purchased almost 50 percent of its stake in the company. However, in the first nine months of 2023, the Bangkok-based supplier group reported a share of loss amounting to $19 million from the seafood chain.
In January, the supplier announced its intention to divest from Red Lobster by the end of 2024, citing the seafood chain’s prolonged negative financial impact on Thai Union and its shareholders. Red Lobster, which is the largest seafood chain globally, opened its first restaurant in Lakeland, Florida in 1968. Since then, the company has owned and operated at least 646 outlets throughout the United States.
