Seafood chain Red Lobster has abruptly closed more than 50 of its locations nationwide, leaving hundreds without jobs and sparking concerns about the company’s financial stability. The closures, which occurred without any public announcement, have shocked many.
Following the sudden closures, liquidation company TAGeX Brands immediately announced an online auction of kitchen equipment and other contents from the shuttered Red Lobster restaurants.
Neal Sherman, CEO of TAGeX Brands, described it as the “largest restaurant liquidation EVER,” inviting bidders via LinkedIn to acquire the entire contents of the Red Lobster locations up for auction, WTHR reported.
While the auction initially listed 48 locations, more than 90 Red Lobster stores nationwide were marked as “temporarily closed” on the restaurant’s website, underscoring the scale of the closures. Social media platforms were flooded with posts from bewildered employees who expressed shock at losing their jobs with no prior notice.
The closures come amid swirling rumors of bankruptcy surrounding the seafood chain, Salon reported.
The chain is contemplating a Chapter 11 bankruptcy filing to address mounting debt following an ill-fated endless shrimp promotion. According to Bloomberg, the chain is considering bankruptcy as it deals with more than a $11 million shortfall incurred from the promotion.
Red Lobster’s limited-time endless shrimp promotion was added permanently to the menu in June 2023, resulting in Q4 losses of $12.5 million.
The decision to explore bankruptcy comes following advice from legal experts at King & Spalding, aimed at restructuring the chain’s debts while reassessing its long-term contracts and leases. Fortress Investment Group, a significant lender to Red Lobster, is actively engaged in ongoing debt negotiations, Good Morning America reported.
The company was founded on January 18, 1968. Bill Darden opened the first Red Lobster in Lakeland, Florida. By 1970, the company received backing from General Mills and started opening locations coast to coast. Red Lobster currently has more than 700 locations worldwide, according to ABC News.
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