Red Lobster could close more restaurants as it continues to recover from its 2024 bankruptcy filing.
CEO Damola Adamolekun told the Wall Street Journal that the seafood chain is reviewing its real estate and leases in an effort to cut costs. Closures could number in the dozens, the Journal reported, citing people familiar with the discussions.
Orlando-based Red Lobster is already working with a smaller footprint, having closed about 130 locations during the bankruptcy, or one out of every five of its restaurants. At the end of 2024, it had 518 U.S. stores.
Notably, Red Lobster does not own the land its restaurants sit on. When private-equity firm Golden Gate Capital acquired the chain in 2014, it sold its real estate for $1.5 billion in a sale-leaseback to help finance the deal.
That saddled Red Lobster with onerous leases that contributed to its bankruptcy filing and continue to put pressure on the company, which operates all of its U.S. restaurants.
Red Lobster was acquired out of bankruptcy by Fortress Capital Management, which injected $70 million into the company and named Adamolekun, the former P.F. Chang's CEO, to lead the brand.
Since then, he has been working to bring customers back to Red Lobster. In his first full year as CEO, he added happy hour and brought back fan-favorite hush puppies, declaring it a “new day” for the brand. Then last June, Red Lobster introduced seafood boils, which proved so popular that they became part of the permanent menu.
Red Lobster’s sales and traffic have improved as a result, the Journal reported, but they are still below pre-bankruptcy levels.
And the company is still working to lower costs. Late last year, it laid off about 200 restaurant employees, many of them managers. It also laid off about 10% of its corporate staff, the Journal reported.
Red Lobster did not respond to multiple requests for comment for this story.
The chain is one of several large casual-dining brands to file for bankruptcy over the past two years, along with Hooters and TGI Fridays. All three are in various stages of bouncing back from the restructuring, and Red Lobster is now almost year and a half into that effort. This latest news suggests a full turnaround will take some time.
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