Is Red Lobster Going Out of Business in 2023? Here’s What We Know So Far

Red Lobster, the beloved seafood restaurant chain known for its endless shrimp deals and cheddar bay biscuits, has landed in hot water recently With nearly 100 locations abruptly shuttering across the country and a Chapter 11 bankruptcy filing in Florida, many fans are worried – is Red Lobster going under in 2023?

As a big fan of those addicting cheddar bay biscuits myself, I was disturbed to hear this news. Red Lobster has been around since 1968, serving up affordable seafood favorites like shrimp scampi and Admiral’s Feast. It’s hard to imagine a world without the coastal-themed chain and its famous biscuits.

Unfortunately, the signs seem to indicate Red Lobster is in serious trouble. Let’s take a look at what’s happened so far and what we can expect in the coming months.

Nearly 100 Red Lobster Locations Have Recently Closed

The most obvious red flag is the sheer number of restaurants that have shut down abruptly As of May 2022, Red Lobster’s website lists 99 closed locations across 28 states. That’s almost 10% of their entire operation, gone seemingly overnight.

Notable closures include restaurants in big cities like San Diego, Denver, Chicago, Atlanta, and Austin. But small towns have been hit too, leading to concerns about job losses in rural communities.

Just last week, an auction site announced plans to sell off kitchen equipment from 48 Red Lobster locations around the country. This seems to confirm that these restaurants have shut down for good, not just temporarily.

Red Lobster’s Parent Company Filed for Bankruptcy

On May 15, 2022, Red Lobster’s parent company announced that it had filed for Chapter 11 bankruptcy protections in Florida.

The company, Thai Union Group, is based in Thailand and has owned a controlling stake in Red Lobster since 2020. The bankruptcy filing reveals Thai Union Group has struggled with a 30% drop in customers since 2019.

Chapter 11 bankruptcy allows a company to restructure and reorganize its debts while continuing to operate. But it’s often the first step leading to full liquidation.

Financial Troubles Have Been Brewing for Years

This bankruptcy didn’t come out of nowhere. Red Lobster has faced increasing challenges in recent years.

In 2014, original parent company Darden Restaurants sold Red Lobster for $2.1 billion to Golden Gate Capital, a private equity firm. This was likely an early sign of trouble, as Darden looked to distance itself from the struggling chain.

Under new ownership, Red Lobster attempted various strategies to boost sales and traffic. But expensive promotions like the “Endless Shrimp” deal ended up backfiring, losing the company $11 million in Q3 2022 alone.

High labor costs, food inflation, supply chain issues, and growing competition from trendier restaurants piled on more pressure. With sales stagnating, profits declined and debts mounted.

But Red Lobster Isn’t Dead Yet

Despite the concerning news, Red Lobster isn’t necessarily going under just yet. Chapter 11 bankruptcy is intended to give companies time to right the ship and emerge stronger on the other side.

Red Lobster still operates over 600 locations employing thousands of people. The company hopes bankruptcy can help them renegotiate leases, reduce debts, and ditch underperforming restaurants dragging them down.

Their beloved seafood recipes and trademarks hold considerable value if they can fix the core business problems. A streamlined operation with lower costs could help Red Lobster thrive again.

Potential Outcomes for Red Lobster Moving Forward

Here are some likely scenarios to expect as Red Lobster’s bankruptcy process moves forward:

• Restructuring and revival: Red Lobster could successfully reorganize with creditors and landlords to reduce liabilities. With a leaner business model, they may recover and rebuild. This is the ideal win-win outcome.

• Acquisition: Another restaurant company may view this as an opportunity to scoop up the Red Lobster brand and assets at a bargain. Franchise groups or private equity firms often take this approach.

• Liquidation: If restructuring fails and no buyer emerges, Red Lobster could be forced into total liquidation. All locations would close and assets sold off to pay debts. Only the recipes and trademarks would survive, likely sold off to the highest bidder.

• Partial revival: Red Lobster may keep a scaled-down operation with just their most profitable locations, closing many but not all restaurants. This would significantly reduce the chain’s footprint.

How You Can Support Red Lobster Right Now

While the fate of Red Lobster hangs in the balance, fans have a few options to show their support:

• Visit open locations: Red Lobster still has 500+ restaurants welcoming diners. Visiting helps keep remaining spots in business. You may even find clearance deals as stock is sold off.

• Order takeout/delivery: Can’t dine in? Ordering shrimp and biscuits to-go still provides revenue. Check delivery apps or the Red Lobster website to see if your local restaurant delivers.

• Purchase gift cards: Purchasing gift cards provides Red Lobster with immediate funds and gives you coupons to use yourself later. Give them as holiday gifts too!

• Share positive memories: Posting throwback photos and fond memories on social media helps boost Red Lobster’s brand recognition and reputation during this PR crisis.

• Sign loyalty programs: Joining My Red Lobster Rewards ensures you’re informed of the latest updates and any new deals or offerings.

Loyal fans may be able to keep their favorite chain afloat by actively supporting Red Lobster when they need it most. But only time will tell if these efforts are enough to save the struggling seafood staple.

The Fate of Red Lobster Still Uncertain

With nearly a hundred restaurants closed, bankruptcy declared, and an uncertain future ahead, these are clearly precarious times for Red Lobster. It’s devastating for longtime fans like me to see them struggling.

While I’m holding out hope for a revival, we may need to start mourning the impending loss of those cheddar bay biscuits. But I’m not ready to give up just yet – Red Lobster has been through ups and downs before over their 50+ year history.

I know I’ll be doing my part by visiting my local Red Lobster soon and ordering an endless pile of buttery biscuits. Here’s hoping the restaurant chain we all know and love can find a way to stay afloat.