Red Lobster Files for Bankruptcy

Image: CNN

By: Aarav Sapra

Red Lobster, based in Orlando, Florida, opened its first restaurant in 1968. The chain now has restaurants across the United States, as well as in Asia and South America. Bar Harbor, a coastal town in Maine, inspires the ornamentation of the restaurants. However, the seafood chain has been facing financial losses for years, and over 50 of its locations in the U.S. have closed. Officials have announced that equipment from more than 50 Red Lobster restaurants in the United States is up for auction. The chain’s website lists dozens of locations as temporarily closed. The auction site features pictures of freezers, ovens, blenders, and other items.

The company’s decision to expand an all-you-can-eat shrimp promotion led to an $11 million quarterly operating loss last year. Reports from Bloomberg News suggested that Red Lobster was considering debt restructuring and possibly filing for bankruptcy. Eventually, on May 20th, 2024, Red Lobster filed for bankruptcy, which revealed details about the Thai Union’s involvement in the shrimp promotion issue. Red Lobster is currently investigating this promotion, which was opposed by its management. Under the direction of Thai Union, Red Lobster eliminated two of its breaded shrimp suppliers, resulting in Thai Union having an exclusive deal to provide shrimp for the chain. As stated in the filing, this resulted in higher costs and needed to align with the company’s typical supplier selection process based on projected demand.

The company continued to shut down, later blaming the pandemic, sustained industry headwinds, higher interest rates, and rising material and labor costs. Red Lobster has long been a popular dining choice for many American families, serving as an introduction to seafood for some. Despite the ongoing challenges, it’s unlikely that Red Lobster will be back in business anytime soon.