Red Lobster closes multiple locations as company prepares to file for bankruptcy

by 24britishtvMay 15, 2024, 9 p.m. 21
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The CFO of Thai Union Group spoke to ABC News about the decision.

Red Lobster closes multiple locations as company prepares to file for bankruptcy

Red Lobster has abruptly closed at least 99 locations across the country with restaurants shutting their doors in at least 27 states.

Tagex Brands, a company that handles restaurant liquidation auctions, told ABC News that Red Lobster recently contacted them to auction off items from 52 locations that will be closing.

The popular seafood restaurant chain began eyeing Chapter 11 to consolidate debts last month. The Wall Street Journal reported Tuesday that the company is now expected to file for bankruptcy "as early as next week," according to people familiar with the matter.

The decision comes just months after a major investor blamed Red Lobster's fumbled "Ultimate Endless Shrimp" promotion for costing the restaurant chain millions in losses.

During an earnings call last year, Red Lobster's former Thailand-based investor, Thai Union Group, shared that the menu promotion contributed to its more than $11 million third quarter operating loss.

Ludovic Garnier, Chief Financial Officer for Thai Union Group, told ABC News this week, "Something which was different from our expectation is the proportion of the people selecting this promotion was much higher compared to expectation."

Financial reporter and affordable lifestyle expert Jennifer Streaks explained that because "consumers now are looking for value when they're going outside of the home" she thinks "consumers really ate more than Red Lobster could afford."

With inflation prompting more Americans to pinch pennies, experts are seeing consumers pivot to restaurants that can offer good value for price, and fast casual chains are seeing a boost in popularity.

"Red lobster is not a fast casual environment. It may be fast seafood, but seafood is still [an] expensive dining experience," Streaks added.

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