The Red Lobster seafood restaurant chain has reportedly shuttered and “temporarily closed” more than 50 units in 27 states from coast to coast across the USA.
According to a Reuters dispatch last month, the Orlando, Florida-headquartered company, which operates approximately 650 restaurants system-wide, considered seeking Chapter 11 bankruptcy protection from creditors in April to secure time for financial restructuring. As of now, however, apparently no filing has been made.
While comments on the financial situation have not yet been forthcoming from Red Lobster executives, Reuters has reported that the company’s cash flows and labor costs have been under pressure as it endeavors to “shed some long-term contracts and renegotiate a swath of leases.”
The chain, a major buyer of frozen fish seafood from global suppliers, is 25% owned by the Thai Union Group, which is seeking to divest its holdings after sustaining significant losses said to exceed $500 million.
“The combination of the 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,” said CEO Thiraphong Chansiri. “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.”
America’s largest seafood chain took a big hit when a $20 “Endless Shrimp” promotion, which invites customers to eat as much as they like for a fixed price, reportedly cost it millions of dollars in losses. “We were expecting an increase of 20% in customer traffic, but the actual number was up to 40%,” said Chansiri.
According to a report from ABC News Channel 7 (WKBW), “the days of endless shrimp and cheesy biscuits may be over” in Western New York, as Red Lobsters restaurants at several locations in the region, including Buffalo, have gone dark. Apparently workers were not notified in advance of the shutdowns by management personnel.
Employees and customers at the shuttered Red Lobster unit in Buffalo were met with a sign taped on a window that advised of the restaurant’s closure, reported WKBW. The notice read: “This location is closed. We look forward to serving you at another Red Lobster location in the future.”
Employee Ramon Garcia, who was informed of the shutdown from a co-worker rather than by his boss or supervisor, commented: “This happened out of nowhere. All the people that we work with, they’re losing their jobs and not knowing what to expect after that. It’s taking a toll on them.”
Meanwhile, TAGeX Brands, a facility and equipment liquidation company, has posted a notice at its website stating: “As of today (May 13), select Red Lobster locations are closed. On our Restaurant Equipment marketplace, we are auctioning off 50+ locations across the country. These auctions are Winner Take All – meaning, each winner will receive the entire contents of the Red Lobster location they bid on. Auctions are live and will end periodically on Thursday, May 16, 2024.”
“TAGeX Brands is proud to launch the largest restaurant liquidation ever through its online auction marketplace. The furniture, fixtures, and equipment from select Red Lobster locations must go ASAP,” said Neal Sherman, the company’s chief executive officer.
