Red Lobster closes dozens of locations nationwide as bankruptcy looms

The wave of at least 99 closures across the country comes as the seafood chain is reportedly planning to file for bankruptcy.
Red Lobster restaurant
About 50 locations were auctioning off furniture and equipment. | Photo: Shutterstock

Editor's note: This is a developing story and will be updated.

Red Lobster closed nearly 100 restaurants and began auctioning off furniture and equipment as the struggling seafood chain reportedly plans to file for bankruptcy.

The contents of nearly 50 Red Lobsters in 21 states were being auctioned off Monday on, according to an email from liquidator TagEx Brands, which called it "the largest restaurant equipment auction ever."

The auction list included locations across the country, from Newport News, Virginia, to Salina, Kansas to San Diego.

And according to Red Lobster's website, 99 of its approximately 650 U.S. restaurants were closed as of Tuesday morning. That includes 17 in the chain's home state of Florida, 11 in New York state, 10 in Texas and eight in California.

The 649-unit chain is expected to file for Chapter 11 bankruptcy before Memorial Day in an effort to ease its debt load and continue operating, according to a report Tuesday by the Wall Street Journal. 

Red Lobster had not responded to a request for comment as of publication time.

Red Lobster closed sign

A sign on the door of Red Lobster in Wauwatosa, Wisconsin. | Photo by Joe Guszkowski

Employees said the closures were sudden and unexpected, with some waking up Monday to texts or calls from co-workers with the news that they no longer had a job. Others found out via a notification in their scheduling app.

An employee of the Red Lobster in Olathe, Kansas, told Restaurant Business that staff was informed Monday that the store was closing, just a day after a busy Mother's Day service. No reason was given for the closure, but the employee assumed it was money-related because the location had good reviews.

"We had a great culture among staff, and that’s the most devastating part," said the employee, who asked to remain anonymous because they were hoping to transfer to another store.

Others said they knew the chain was on shaky ground, but were under the impression that their stores were doing well.

"We were a profitable location, we ran well and had a good crew," said Tyler Johnson, a server at the Red Lobster in Ledgewood, New Jersey. "No one at the restaurant had any idea."

The chain has been struggling for years with sales and profit declines. The situation reached a boiling point last year as the chain bled money, prompting minority owner Thai Union Group to abandon a turnaround effort and divest from the company. 

The financial problems were worsened by an all-you-can-eat shrimp promotion last summer that appealed to customers but lost money.

In March, Red Lobster hired restructuring expert Jonathan Tibus as CEO, its fourth in three years.

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