According to Red Lobster, the company intends to use the bankruptcy proceedings to “drive operational improvements, simplify the business through a reduction in locations, and pursue a sale of substantially all of its assets.”
Red Lobster, founded in 1968 and headquartered in Orlando, said in the statement Sunday night it would sell its business to a new entity that will be wholly owned and controlled by its lenders, and that “Red Lobsters restaurants will remain open and operating as usual during the Chapter 11 process.” The company has been working with vendors to ensure restaurant operations are unaffected, according to the statement.
“This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth,” said Jonathan Tibus, the companys CEO, in the statement. “The support weve received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests.”
Heres what we know about the closures, including where theyre happening and why these restaurants are closing.
Red Lobster updates: Red Lobster lists 99 restaurants closed in 28 states: See locations closing in your state
Red Lobster bankruptcy: Red Lobster files for bankruptcy days after closing dozens of locations across the US
Red Lobster, the iconic seafood restaurant chain known for its cheddar bay biscuits and all-you-can-eat shrimp deals, has faced some serious financial troubles in recent years Rumors have been swirling that Red Lobster may be going out of business or filing for bankruptcy in 2023 But is this beloved restaurant chain really shutting down for good?
Red Lobster’s Recent Struggles
There are several factors that have contributed to Red Lobster’s current financial situation
-
Sales Declines – Red Lobster’s sales have been stagnant or declining for over a decade. From 2014 to 2020, yearly sales hovered between $2.3 billion to $2.5 billion. In 2020, sales dropped to $1.76 billion due to COVID-19 closures.
-
Rising Costs – Like all restaurants, Red Lobster has been hit hard by inflation, increased wholesale food prices, higher wages, and supply chain issues. Their costs have risen sharply in recent years.
-
Ownership Changes – Red Lobster has cycled through multiple owners in the last decade, including Darden Restaurants, Golden Gate Capital, and Thai Union. This lack of stable leadership has hurt the chain.
-
Competition – Casual dining chains like Red Lobster face strong competition from fast-casual chains like Chipotle, Shake Shack, and others. This competition has taken a toll on sales.
-
Real Estate Issues – Past financial decisions have left Red Lobster renting many of their restaurant locations instead of owning them. This leaves them vulnerable to rising rents and inflexible leases.
-
Promotion Backfire – Red Lobster lost over $11 million in one quarter of 2023 due to their poorly planned Endless Shrimp promotion.
Red Lobster’s Bankruptcy Filing
In May 2024, after closing dozens of underperforming locations, Red Lobster filed for Chapter 11 bankruptcy protection. This allows the company to restructure its finances and operations while continuing to run its 500+ remaining restaurants.
Red Lobster stated the bankruptcy filing will help them get out of expensive leases, reduce debt, and ultimately emerge as a stronger company. The chain has secured $100 million in new financing from lenders to keep operating normally throughout the process.
The bankruptcy filing cited between $1 billion to $10 billion in liabilities. One major creditor, food distributor Performance Food Group, claims Red Lobster owes over $24 million.
Is Red Lobster Going Away Permanently?
Despite the bankruptcy filing, Red Lobster insists it is not going away for good. The bankrupt company plans to sell itself to its current lenders, Fortress Credit Corp. Fortress has restaurant turnaround experience with chains like Krystal and Logan’s Roadhouse.
The new Red Lobster CEO, restaurant veteran Jonathan Tibus, stated “the best path forward is to voluntarily file for Chapter 11…Our restaurants will remain open and operating as normal.”
Bankruptcy filings are meant to help struggling companies bounce back. Red Lobster hopes to emerge from bankruptcy with lower debts and a more sustainable operating model.
Most experts believe Chapter 11 bankruptcy will allow Red Lobster to stay in business while closing underperforming locations and improving profitability.
The Future of Red Lobster
While Red Lobster’s bankruptcy filing is serious, it does not mean the chain is shutting down for good. Here are some likely scenarios for Red Lobster going forward:
-
Smaller Footprint – Red Lobster will probably emerge from bankruptcy with fewer total restaurants, around 400-500 locations. Closing underperforming and out-of-date stores will help boost profit margins.
-
New Leadership – New owner Fortress Credit Corp will bring in experienced restaurant turnaround experts to overhaul operations and marketing. More stable leadership could improve performance.
-
Menu Innovation – Red Lobster needs updated menus and new promotions to attract customers. Endless Shrimp clearly backfired, so experts expect more innovation and creativity ahead.
-
Emphasis on Takeout/Delivery – Red Lobster saw success with takeout during COVID-19. Post-bankruptcy, look for Red Lobster to double down on takeout, delivery, and digital orders to boost sales.
-
Asset Sales – Red Lobster may sell off non-core assets like partial real estate holdings to pay down debts and raise cash for turnaround efforts.
-
Franchising – Franchising more Red Lobster locations, especially overseas, could be part of the growth strategy going forward. This allows expansion without massive capital investment.
Should You Still Eat at Red Lobster?
During bankruptcy, Red Lobster restaurants will stay open with minimal disruption to the customer experience. You can still safely enjoy Cheddar Bay Biscuits without worry.
In fact, spending money at local Red Lobsters during the bankruptcy process helps keep the chain afloat. The company needs cash flow now more than ever.
As a beloved brand, Red Lobster still has devotees who want to see it succeed. Bankruptcy does not mean Red Lobster is gone for good. Continued patronage helps them complete the process.
So if you want to continue enjoying shrimp scampi, lobster tails, and those addicting Cheddar Bay biscuits, Red Lobster is certainly still open for business. The bankruptcy is meant to turn them around, not shut them down.
Red Lobster Still Has Hope
Red Lobster’s bankruptcy filing is certainly serious business. But Chapter 11 bankruptcy is meant to save struggling companies rather than dissolve them.
With new ownership, financing, leadership and a streamlined operation, Red Lobster has a legitimate chance to bounce back from years of struggles. Their loyal fans also give them a major advantage.
For seafood lovers hoping Red Lobster sticks around, the evidence suggests they still have reason for optimism. As of 2023, it appears Red Lobster is not going out of business permanently, but rather using bankruptcy to reboot for the future.
Which Red Lobster locations are closed?
Each of these restaurants are currently listed as temporarily closed on the website:
Will America lose Red Lobster? Changing times bring sea change to menu, history, outlook
Who own Red Lobster restaurants?
Thai Union Group − which is based in Thailand − has been the largest shareholder since 2020, owning 49% of the company. Darden Restaurants originally sold off Red Lobster to private equity firm Golden Gate Capital in 2014 for about $2.1 billion.
The REAL Reason Red Lobster Went Bankrupt
FAQ
Is Red Lobster going out of business completely?
Following the court’s approval, Red Lobster will continue to operate as an independent company and maintain 544 locations across 44 U.S. states and four Canadian provinces, the company said.
Are all red lobsters closing for good?
Once complete, the chain will have around 500 outlets left — a sharp decline from the 650 it had just last year. Red Lobster is in the process of selling itself to Fortress Credit Corp., a lender experienced in restaurant management that also owns Krystal, Logan’s Roadhouse and J. Alexander’s.
What is happening at Red Lobster?
Red Lobster is no longer in bankruptcy, and an industry survey last month from the National Restaurant Association shows that about eight in 10 restaurant operators expect sales in 2025 to be the same or higher as last year.
What caused the downfall of Red Lobster?
The chain declared bankruptcy in 2024 citing declining revenues, increased operational costs, and poor strategic decisions as the main reasons, but has …Jan 6, 2025
Is Red Lobster going out of business?
FOX Business’ Eric Revell contributed to this report. The Red Lobster restaurant franchise will not be going out of business despite filing for Chapter 11 bankruptcy, announcing on Tuesday that remaining locations are undergoing a cost restructuring.
Will Red Lobster go bankrupt?
FOX Business noted that the U.S. Bankruptcy Court for the Middle District of Florida on Sept. 5 approved RL Investor Holding’s Chapter 11 plan, clearing a path for Red Lobster to exit the bankruptcy process it began in May. RELATED: Red Lobster files for bankruptcy after dozens of restaurant closures
What is Red Lobster’s restructuring plan?
Red Lobster is exiting its Chapter 11 bankruptcy after a federal judge approved the seafood restaurant chain’s restructuring plan on Thursday — four months after the company first announced it had filed for bankruptcy.
Why did Red Lobster lose $11 million in Q3 2023?
Annual sales slumped in 2020 and failed to return to previous levels. Financial reports leading up to 2024 reveal that Red Lobster faced significant financial challenges. In Q3 2023, the company reported a net loss of $11 million, attributed largely to the popularity of their “Endless Shrimp” promotion.
Is a Red Lobster restaurant closing?
A sign announcing the closure of a Red Lobster restaurant is posted on the front of a Red Lobster restaurant on May 14, 2024 in Fremont, California. Justin Sullivan/Getty Images
Who is the new CEO of Red Lobster?
As part of its restructuring plan, Red Lobster will bring on Damola Adamolekun as the new CEO. A group of investors under the name RL Investor Holdings LLC will acquire the restaurant chain, with the acquisition expected to close before the end of September.