Why are Red Lobster restaurants closing?

For seafood lovers across America, your options for getting that Cheddar Bay Biscuit fix just got a bit slimmer. The struggles keep mounting for Red Lobster as the casual dining chain finds itself closing down over 50 restaurant locations nationwide.

In my opinion, there are two groups of people: Oliver Gardeners and Red Lobster-ers. I’ve been to the endless soup and breadstick franchise once about 10 years ago, and that was one time too many. To be honest, Olive Garden could burn down tomorrow and I’d probably go roast marshmallows over the flames. But Red Lobster was different. It was my family’s go-to location for any type of special occasion.

Celebrating a birthday? Red Lobster.

Anniversary? Red Lobster.

Commemorating a divorce? Red. Lobster.

So, it’s with the heaviest of hearts that I write this article.

Is the beloved Red Lobster franchise closing its doors for good?

The mass closures, representing about 15% of Red Lobster’s over 600 spots, were revealed through an auction listing from TAGeX Brands. The liquidation firm is overseeing the sale of everything from kitchen equipment and furniture down to those iconic red booths at nearly 50 shuttered Red Lobsters across over 20 states.

While multiple locations have gone dark before, this widespread culling of underperforming restaurants marks one of the only times in the 55-year-old seafood chain’s history that so many stores closed their doors all at once. It’s the latest indication that Red Lobster is virtually drowning under the weight of recent corporate turmoil, skyrocketing costs, and pretty rather ill-advised business decisions.

You see, Red Lobster’s current owner, Thai Union Group, has been trying to revive the flagging brand since acquiring a stake back in 2020. But their tenure has been nothing short of a dumpster fire, with four different CEOs cycled through in just three years as they struggled to right the ship.

Their biggest blunder? Making Red Lobster’s historically limited-time “Endless Shrimp” deal a permanent menu item. While the goal was to drive customer traffic, the promotion’s popularity completely overwhelmed operations. Turns out, Americans really, really love bottomless shrimp – so much so that it led to a staggering $11 million operating loss in Q3 2023 alone forcing them to raise the pricing.

Thai Union’s investment in the flailing chain has been such a disaster that they finally threw in the towel earlier this year. The company announced plans to completely divest from Red Lobster, eating a whopping $530 million loss while citing “sustained industry headwinds” like the pandemic’s impacts, spiking costs and interest rates as factors.

The chain’s new CEO, restructuring expert Jonathan Tibus, certainly has his work cut out for him as bankruptcy rumors continue swirling. Red Lobster was reportedly seeking a buyer last month in hopes of avoiding that fate, though no savior has emerged yet.

Still, not all is lost for the seafood chain’s future. While the closures put a major dent in their over 700 global locations, they’ll still have well over 600 stores remaining to attempt a turnaround. A buyer with deep pockets and solid corporate leadership could theoretically help bail Red Lobster out, and I’m sure millions of people (including myself) are crossing their fingers and praying for a miracle.

But any incoming ownership will need to get very creative to win back the rapidly shrinking portion of customers still loyal to the relatively dated chain. The explosive growth of fast-casual, cult chains like Chipotle and Chick-fil-A have been putting the squeeze on the entire struggling sector for years now, so Red Lobster clearly has a rough road ahead.