Red Lobster 'to file for bankruptcy next week' after seafood chain announced dozens of restaurants to close

Struggling seafood restaurant chain Red Lobster is preparing to file for bankruptcy next week after abruptly closing at least 48 of its outlets across the US.   

Red Lobster is expected to file a chapter 11 bankruptcy petition in Orlando, Florida, before Memorial Day, according to The Wall Street Journal.

The filing would allow the chain to restructure its debt, discard long-term contracts and renegotiate new leases. 

The chain 'temporarily closed' locations in Buffalo, Orlando, Jacksonville and other cities, and is auctioning off kitchen equipment and furniture, according to CNN, leaving workers scrambling to find new jobs. 

Red Lobster's cash flows have been hit by expensive leases and high labor costs.

Red Lobster is considering filing for bankruptcy as high costs and low sales ground the business

It comes after the company last year reported record losses of $11 million, which its CFO partly blamed on its unlimited shrimp deal.

The chain, which started as a single restaurant in Lakeland, Florida, in 1968 has around 650 locations across almost all states. It's famous for its cheese-flavored biscuits.

News of the bankruptcy was first reported by Bloomberg, which said the restaurant chain is taking advice from the law firm King & Spalding.

Those familiar with the matter told the outlet the decision was yet to be finalized, but that bankruptcy would allow the company to continue operating.

Red Lobster's famous shrimp promotion came as it wanted to lure in more customers after significant losses of $5.4 million in the second quarter of 2023.

The chain has 'temporarily closed' locations in Buffalo, Orlando, Jacksonville and other cities

The chain has 'temporarily closed' locations in Buffalo, Orlando, Jacksonville and other cities

But those plans backfired since the 'all you can eat' promotion was too generous.

For just $20, diners could indulge in as much of the shellfish as they could stomach.

The 'Endless Shrimp' offer was initially a special but in June it claimed a permanent spot on the Red Lobster menu. Foot traffic reportedly increased by 4 percent as a result.

More people were ordering the Endless Shrimp than the company anticipated - likely because the deal went viral on social media platforms like TikTok, where people showed off how much they ate to get their money's worth.

'For those who have been in the US recently, $20 was very cheap. And the rationale for this promotion was to say we knew the price was cheap, but the idea was to bring more traffic in the restaurants,' said CFO Ludovic Garnier in November.

The chain, which started as a single restaurant in Lakeland, Florida , in 1968 has around 650 locations across almost all states with its menu offering variations of shrimp-infused items  

For just $20, diners could indulge in as much of the shellfish as they could stomach, but the price was later bumped to $25

'But something which was different from our expectation is the proportion of the people selecting these promotions was much higher compared to expectation,' he added.

Eventually, the company bumped the price of their Endless Shrimp up to $25 in a bid to reclaim some of the losses.

Red Lobster has had multiple owners in recent years. It was previously owned by the Darden restaurant group, which also owned Olive Garden, but was taken over by Golden Gate Capital in 2014.

In 2020 it was purchased by Thai Union, which this year said its 'ongoing financial requirements no longer align with Thai Union's capital allocation priorities.'

The closures have left its workers in a scramble to find employment, with many Red Lobster staff claiming they were laid off with no warning. 

One Tiktokker posted a stitched video that started with her talking through her day working at Red Lobster on Mother's Day, before she complained about being laid off.

The chain has 'temporarily closed' locations in Buffalo, Orlando, Jacksonville and other cities

X users took to the social media platform to complain about being laid off

She said in the video, posted with the caption 'I got another job but still DAMN RED LOBSTER': 'Why was that my last shift working there?

'I just got a phone call this morning saying out location is closed.

'Y'all know Red Lobster was going bankrupt, they don't have no money [sic] to be playing around and out location was... we wasn't [sic] the best location, so it makes sense.

'I ain't gonna lie, if you work at Red Lobster, you need to start finding something else to do.'

Another TikTokker posted a video of her sadly dancing through what appeared to be the stockroom of a Red Lobster location. 

The video was posted with the caption: 'Trying to laugh through the pain.'

Former Red Lobster workers also took to X to complain. One user said: 'Im trying so hard to put on a smile right now. I feel like I could break at any moment.'