Red Lobster Closing 48 Restaurants Amid Financial Struggles

Struggling Seafood Chain Auctions Off 99 Locations

May 14 2024 737 AM PDT

Red Lobster, the popular seafood chain, is facing financial difficulties and has abruptly closed at least 48 of its restaurants around the country. The closures come amid an auction of at least 99 Red Lobster locations, raising questions about the future of the stalwart seafood chain.

Endless Shrimp Deal and Onerous Costs

One factor contributing to Red Lobster's struggles is its popular Endless Shrimp deal. Once a popular promotion, the $20 offer has become a key factor in the chain's financial woes. Additionally, Red Lobster has been burdened by onerous leases and high labor costs.

Florida-based Chain Sold to Private Equity Firm

Red Lobster, a Florida-based casual dining chain, was sold by its parent company, Darden, to Golden Gate Capital, a private equity firm, in 2021 for $2.1 billion. The sale was made to help fund the deal, and Red Lobster has since spun off its Red Lobster Restaurant Services business.

The future of Red Lobster remains uncertain. The chain's financial struggles and the closure of numerous restaurants indicate a need for significant changes to address the challenges it faces.