Red Lobster could close more than 100 additional restaurants if it’s unable to renegotiate their leases, according to bankruptcy documents filed this week.
In the filings, Red Lobster lists 228 rejected leases that the company has determined will keep losing money if they continue operating as-is. The list includes at least some of the 93 locations that Red Lobster abruptly closed on May 13, suggesting that about 135 more are at risk of closing.
Red Lobster had not responded to a request for comment as of publication time.
The rejected leases account for 40% of the chain, which has 570 locations across the country. They include Red Lobster’s high-profile location in Times Square, which the chain is working to keep open, the New York Post reported Friday. According to the Post, the chain’s Times Square landlords are raising the annual rent to $2.2 million, more than double what Red Lobster is believed to be currently paying. It has been in the location for 22 years.
Orlando-based Red Lobster declared bankruptcy on May 19 with $300 million in debt in one of the biggest such filings in industry history. It blamed its financial troubles on inflation, burdensome leases and management missteps, particularly a $20 all-you-can-eat shrimp promotion last summer. The chain also put itself up for sale and indicated that it could close more locations.
The potential for more closures is another blow in what has been at least a decade of decline at the nation’s largest seafood chain. In 2014, Red Lobster was sold by venerable operator Darden Restaurants to private-equity firm Golden Gate Capital. The PE firm then sold much of Red Lobster’s real estate in a sale-leaseback deal, which has contributed to Red Lobster’s current lease problems.
In 2020, Golden Gate sold what was left of its stake to a group consisting of seafood supplier Thai Union Group and other investors. In an effort to fix issues at Red Lobster, Thai Union began taking a more hands-on approach at the chain last year. That included the ill-advised Endless Shrimp promotion that cost the chain $11 million in a single quarter.
In its bankruptcy filing, Red Lobster accused former CEO Paul Kenny and Thai Union of using the promotion to benefit Thai Union’s shrimp business. Thai Union earlier this year announced plans to exit its investment in Red Lobster.
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