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Red Lobster planning the closure of ANOTHER 135 restaurants if landlords won't give in to the chain's demands
Red Lobster is ready to close another batch of more than 100 restaurants if it is unable to renegotiate cheaper rent with its landlords.
The seafood chain abruptly closed 93 of its 700-odd restaurants on May 13 - and the next week filed for Chapter 11 bankruptcy in the hope it can restructure its debts.
New court documents reveal that there are another 135 restaurants that bosses say will keep losing money if leases stay as they are, Restaurant Business reported. The option is for the company to pay less rent or shut them.
They include the iconic Times Square location which the company claims its is trying to keep open, according to the New York Post.
The restaurant's landlord is reportedly doubling the location's rent to $2.2 million a year, posing a threat to the 22-year-old lease.
Red Lobster is set to close a further 100 restaurants if its unable to renegotiate cheaper rent
Endless shrimp started at $20 but was too popular and cost millions of dollars
Red Lobster has just a few weeks to agree a deal with the landlord as the new lease is set to begin on June 30.
The decision to include the high-profile location on its list of rejected leases 'could be a way to exert pressure on the landlord,' bankruptcy attorney Patrick Collins told The Post.
'It's a way for the company to signal to the landlord that unless something changes it's prepared to close that store,' Collins added.
Bankruptcy court documents show that there were a total of 228 leases that the company calculated will keep losing money unless the rent is cut.
That includes many of the 93 already shuttered - leaving 135 at risk of closure.
Red Lobster´s roots date back to 1968, when the first restaurant opened in Lakeland, Florida.
The casual dining favorite officially filed for Chapter 11 bankruptcy on May 19. 13319081
Prior to the bankruptcy filing restaurant liquidator TAGeX Brands auctioned off the equipment of 48 closed Red Lobster locations.
Its current problems have been blamed on rising lease and labor costs in recent years and its infamous $20 all-you-can-eat shrimp deal that backfired.
The offer, launched last June as a permanent fixture on the menu, is almost identical to a deal in 2003 - and the problems it caused are almost identical too.
Back then, it was 'endless crab'. It was great for hungry seafood lovers but a disaster for the restaurant - by the time the plug was pulled after just seven weeks Red Lobster had lost $3.3 million.
'It wasn't the second helping on all-you-can-eat, but the third' that hurt profits, a Red Lobster executive said to analysts at the time in 2003.
This time, the deal was also wildly popular - with some customers staying for hours to see how many the could eat. One girl managed 108 in four hours.
The chain's bankruptcy follows the disastrous 'endless shrimp' promotion, which started at $20 and rose to $25
'I set a new record at my local Red Lobster, this is my greatest achievement in life' the poster explained in her video.
More people began to take advantage of the offer than the company expected. But rather than pull the deal, bosses kept it running for six months - and the losses dwarfed the amount lost for endless crabs 20 years earlier.
Seafood lovers devouring plates of shrimps was the key reason that Red Lobster's majority owner Thai Union lost $11 million in just three months soon after the deal began.
Ludovic Garnier, the chief financial officer, said: 'We knew the price was cheap, but the idea was to bring more traffic in the restaurants.'
'So we wanted to boost our traffic, and it didn't work.'
'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.
'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.