Chicago/ Food & Drinks
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Published on May 15, 2024
Red Lobster Considers Bankruptcy as Over 80 Locations Close, Including Two in Illinois Amid Financial TurmoilSource: Google Street View

The seafood chain Red Lobster, a longtime staple for diners seeking affordable ocean fare, is hitting choppy waters, with over 80 locations listed as "temporarily closed" across the United States, including two in Illinois. This wave of closures comes amid the chain's reported considerations for Chapter 11 bankruptcy protection as it grapples with financial struggles, as reported by NBC Chicago.

Hard hit by an "Ultimate Endless Shrimp Deal" that backfired due to overwhelming demand, the chain saw a roughly $11 million loss in the third quarter of 2023. Thai Union, Red Lobster's parent company, acknowledged the marketing strategy aimed to boost restaurant traffic, with CFO Ludovic Garnier stating in an earnings call, "We knew the price was cheap. But the idea was to bring more traffic to the restaurants," as stated by NBC Chicago. Illinois has 25 Red Lobster restaurants in total, including 16 in the Chicago area, which now may face uncertain futures.

In a related development, restaurant liquidator TAGeX Brands announced the auctioning of equipment from over 50 Red Lobster locations as part of the chain's "footprint rationalization." TAGeX Brands aims to sell off the entire contents of these shuttered restaurants, preventing high-quality items from being discarded, and promoting sustainable reuse instead, as per the Chicago Sun-Times. "Winner takes all" auctions for the liquidation began Monday and will run through Thursday, with 48 locations still up for grabs after four concluded the prior day.

Red Lobster, which first opened its doors in 1968 and expanded rapidly over the decades, has been on shaky ground in recent years, with Thai Union Group, a major seafood supplier and part owner decrying "prolonged negative financial contributions" from their association with the chain. The pandemic, industry headwinds, and rising costs have taken their toll, contributing to a reported $19 million share of loss for the Thai Union in the first nine months of 2023.