Red Lobster has closed more than 100 of its roughly 650 US locations amidst bankruptcy, but the remainder can and likely will be saved, experts say. As of May 22, Red Lobster's website listed 99 locations in 28 states that had been closed. Another seven locations have since been shuttered, bringing the total to 106, per USA Today. But in agreeing last week to be sold out of bankruptcy to lender Fortress Investment Group for approximately $375 million, Red Lobster should be able "to continue operating more or less as usual and without further closures," per Restaurant Business.
The chain was badly hurt by owner Thai Union Group's decision to promote $20 endless shrimp "without giving too much thought as to whether Red Lobster could withstand a $20 promotion forever, or whether customers really wanted it," Daniel Gielchinsky, a Florida-based attorney who's helped Party City, Toys R Us, and other companies through bankruptcy, tells Quartz. The number of visitors has actually fallen 30% since 2019, per USA Today. But "the company has a lot of goodwill and lot of brand equity" and "the market has been cheering for Red Lobster to emerge as a healthier business," says Gielchinsky.
RJ Hottovy of foot traffic analytics firm Placer.ai says the chain's new owners will need to decide which locations are viable and which "are probably just worth letting go." Bankruptcy filings refer to 228 leases through which the company is losing money, per USA Today, which notes some of the closed restaurants are among the 228. But if the new owners make the right moves, the stage will be set for the world's largest seafood chain to make a comeback, says Gielchinsky. Indeed, he predicts Red Lobster will emerge as "a stronger chain" within a year. (More Red Lobster stories.)
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