Red Lobster is closing ~15% of its restaurants

Red Lobster is shuttering roughly 99 locations and auctioning off restaurant equipment as it struggles with debt, unfavorable lease terms and an ill-formulated all-you-can-eat-shrimp promotion last fall.

The closures represent 15% of the iconic chain and are an attempt to stay afloat as it faces bankruptcy.

The first Red Lobster opened more than five decades ago and was a hit among people for bringing affordable seafood to middle-class consumers for the first time. However, corporate mismanagement and wrong decisions led to its downfall.

Thai Union, the longtime shrimp provider, bought a stake in the chain in 2016 and then again in 2020, and according to a former employee, they started cutting costs “everywhere they could.” They changed the menu and even removed waitstaff to reduce labor costs.

The seafood provider also brought in new management in 2021 and 2022, all of whom left within two years.

Then Thai Union made $20 endless shrimp part of the permanent menu, which led to the chain losing $11 million in the third quarter of 2023.

Earlier this year, Thai Union announced it was seeking to exit from the chain.

Red Lobster has been looking for buyers to avoid bankruptcy, CNBC reported last month, but no progress has been made so far.