Red Lobster files for bankruptcy, closes dozens of US locations, including Washington store

Red Lobster, the casual dining chain that brought seafood to the masses with inventions like popcorn shrimp and “endless” seafood deals, has filed for Chapter 11 bankruptcy protection.

The 56-year-old chain made the filing late Sunday, days after shuttering dozens of restaurants.

“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 Red Lobster CEO Jonathan Tibus, a corporate restructuring expert who took the top post at the chain in March.

Red Lobster said it will use the bankruptcy proceedings to simplify its operations, close restaurants and pursue a sale. As part of the filings, Red Lobster has entered into a so-called “stalking horse” agreement, meaning it plans to sell its business to an entity formed and controlled by its lenders.

Red Lobster has been struggling for some time as it has had to deal with lease and labor costs piling up in recent years. The filing could help Red Lobster exit from some long-term contracts and renegotiate many of its leases, unnamed sources familiar with the matter told Bloomberg News last month.

The move comes after restaurant liquidator TAGeX Brands announced last week that it was going to auction off the equipment of over 50 Red Lobster locations that were recently closed as part of the seafood chain’s “footprint rationalization.” The locations span across more than 20 states — cutting back on Red Lobster’s presence in cities like Denver, San Antonio, Indianapolis and Sacramento, California. TAGeX Brands states it is selling equipment from five locations in Florida and California and four restaurants in Maryland and Colorado.

TAGeX Brands’ auctions began last Monday and ran through last Thursday. The sales were “winner takes all” — meaning that one winner will receive the entirety of contents for each location. Images on TAGeX Brands’ website indicated that includes ovens, refrigerators, bar setups, dining furniture and more.

TAGeX Brands called the liquidation “the largest restaurant equipment auction event ever.” In a statement, founder and CEO Neal Sherman said that the goal of such online auctions was to “prevent high-quality items from being discarded in landfills” and instead promote sustainable reuse.

It’s unclear if Red Lobster plans to shutter any additional restaurants in the near future. The Orlando, Florida-based company did not immediately respond to The Associated Press’ requests for comment before publishing its story Tuesday.

Silverdale location is closed; 9 Washington restaurants remain

On Red Lobster’s website, a handful of impacted locations were listed as “temporarily closed” or “unavailable” Tuesday morning.

The TAGeX Brands website indicated some the equipment it will be trying to sell comes from the location in Silverdale. Those who visit the Red Lobster website and head to the page for the Silverdale location will see the hours of operation are marked as “closed” for all seven days of the week.

The Red Lobster closures have not affected the other nine locations in the state of Washington. Restaurants in Federal Way, Kelso, Kennewick, Lynnwood, Olympia, Spokane, Tacoma, Vancouver and Yakima remain open as normal, according to the Red Lobster website.

In addition, the five locations in Oregon have not been affected by the closures. Restaurants in Eugene, Gresham, Medford, Salem and Tigard also are open as usual, the Red Lobster website states.

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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. (Photo: Justin Sullivan, Getty Images)

Lingering difficulties for Red Lobster

Maintaining stable management has also proven difficult, with the company seeing multiple ownership changes over its history. Earlier this year, Red Lobster co-owner Thai Union Group, one of the world’s largest seafood suppliers, announced its intention to exit its minority investment in the dining chain.

Thai Union first invested in Red Lobster in 2016 and upped its stake in 2020. At the time of the January announcement on its plans to divest, CEO Thiraphong Chansiri said the COVID-19 pandemic, industry headwinds and rising operating costs had impacted Red Lobster and resulted in “prolonged negative financial contributions to Thai Union and its shareholders.”

For the first nine months of 2023, the Thailand company reported a $19 million share of loss from Red Lobster.

And then there’s been the problem of endless shrimp. Last year, Red Lobster significantly expanded its iconic all-you-can-eat shrimp deal. But customer demand overwhelmed what the chain could afford, which also reportedly contributed to the millions in losses.

Red Lobster’s roots date back to 1968, when the first restaurant opened in Lakeland, Florida. In the decades following, the chain expanded rapidly. Red Lobster currently touts more than 700 locations worldwide.

Editors’ note: This piece originally was published on Thursday, May 16, 2024. It has been updated and republished multiple times since then.

Contributing: The Associated Press; Steve Coogan, MyNorthwest