Is Red Lobster going out of business? Chain officially files for bankruptcy amid restaurant closures

Red Lobster fans are worried that they’ll have to say goodbye to cheddar bay biscuits following news that Red Lobster has filed for bankruptcy and shut down approximately 100 locations.

Red Lobster is a popular hotspot for a lobster dinner and some of those famous Cheddar Bay Biscuits, however, despite clever marketing campaigns in the past few years (like their April Fools’ prank), the business has been struggling.

Red Lobster filed for Chapter 11 bankruptcy late on Sunday, May 19, 2024. In a statement, Red Lobster said it plans to sell “substantially all” of its assets.

The company, which reported roughly $294 million in outstanding debt, added that the restaurants that were not closed in the mass shutdown would remain open for guests.

There has been some turbulence for the chain in the past, having recently appointed their third CEO in two years.

Contents:

• What is Chapter 11 bankruptcy?
• Red Lobster closes more than a fifth of all locations
• How did shrimp put Red Lobster in mega-debt?
• What is the future of Red Lobster?
• Full list affected by Red Lobster closures

What is Chapter 11 bankruptcy?

According to United States Courts, “A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a “reorganization” bankruptcy. Usually, the debtor remains “in possession,” has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money.”

This basically means that Red Lobster can still operate pretty much as normal whilst still technically being ‘bankrupt.’

Red Lobster closes more than a fifth of all locations

According to a report published by CoStar on May 15 2024: “Red Lobster abruptly closed about 100 of its locations and is auctioning off equipment from some of those sites.”

You can see a full list of the locations affected here.

Their website currently states that these stores are, “temporarily closed.” At the same time, restaurant industry liquidator TAGeX Brands announced on LinkedIn that they would be conducting the biggest restaurant equipment auction ever. The Orlando-based chain will now be left with only around 500 restaurants across the US.

How shrimp put Red Lobster in mega-debt

According to Restaurant Business, the downfall of Red Lobster is down to “Leadership problems, a tough economy and all-you-can-eat shrimp.”

In 2022, Red Lobster lost $33 million and closed 16 of their restaurants. In a bid to bring paying customers back to their restaurants, they launched $20 all-you-can-eat shrimp in Summer 2023.

The deal was really popular and certainly brought seafood fans through the door, but supplying this much shrimp to their branches cost them $11 million in one quarter.

Current owners Thai Union Group, who bought the chain for $2.1m in 2014, are currently preparing the brand for sale.

What is the future of Red Lobster?

As it stands now, Red Lobster is not currently going out of business, in that they are not currently planning to close all of their stores. News of the company filing for bankruptcy could be a step in the right direction as it allows Red Lobster to focus on the brand rather than their debt and to still serve customers, albeit on a smaller scale.

Bear in mind that this is not the first fast-food chain to file for bankruptcy, and even McDonald’s and Wendy’s franchisees filed at one point.

All closed Red Lobster restaurants

Each of these restaurants is currently listed as “temporarily closed” on Red Lobster’s website as they prepare to liquidate. The chain is closing 15 of their stores in their home state of Florida.

Alabama

• Decatur
• Huntsville
• Mobile

Arizona

• Oro Valley

California

• Fremont
• Montclair
• Rohnert Park
• Sacramento
• San Diego
• Torrance

Colorado

• Denver
• Lakewood
• Lone Tree
• Wheat Ridge

Florida

• Altamonte Springs
• Daytona Beach Shores
• Gainesville
• Hialeah
• Jacksonville (Commerce Center Drive) 
• Jacksonville (Baymeadows Road) 
• Jacksonville (City Station Drive)
• Kissimmee
• Largo
• Leesburg
• Orlando (E. Colonial Dr.)
• Orlando (W. Colonial Dr.)
• Orlando (Golden Sky Lane) 
• Sanford
• Tampa (East Busch Blvd.)
• Tampa (Palm Pointe Dr.)

Georgia

• Athens
• Dublin
• Roswell

Idaho

• Lewiston

Illinois

• Bloomingdale
• Danville

Indiana

• Elkhart 
• Indianapolis (N. Shadeland Ave.)

Iowa

• Waterloo

Kansas

• Kansas City
• Olathe

Louisiana

• Bossier City

Maryland

• Columbia
• Gaithersburg
• Laurel
• Silver Spring

Mississippi

• Jackson

Missouri

• Jefferson City

New Jersey

• Bridgewater
• East Brunswick
• Ledgewood
• Lawrenceville

New York

• Amherst
• Buffalo
• Kingston
• Lakewood
• Nanuet
• Rochester
• Poughkeepsie
• Scarsdale
• Stony Brook
• Williamsville

North Carolina

• Burlington
• Cary
• Durham
• Rocky Mount

North Dakota

• Grand Forks

Oklahoma

• Lawton
• Oklahoma City
• Stillwater

Pennsylvania

• Erie

South Carolina

• Myrtle Beach

Tennessee

• Memphis

Texas

• Dallas (E. Technology Blvd.)
• Dallas (Vantage Point Dr.)
• Houston
• Lake Jackson
• Longview
• Lufkin
• Pasadena
• Tyler