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Red Lobster closes dozens of locations months after ‘endless shrimp’ losses

NEW YORK — Dozens of Red Lobster locations across the United States are on the chopping block.

Restaurant liquidator TAGeX Brands announced this week that it will auction off equipment from more than 50 recently shuttered Red Lobster locations as part of the seafood chain’s “footprint rationalization.” span more than 20 states, reducing Red Lobster’s presence in cities like Denver, San Antonio, Indianapolis and Sacramento.

It’s unclear if Red Lobster plans to close other restaurants in the near future. The Orlando, Fla.-based company did not immediately respond to requests for comment from The Associated Press.

On Red Lobster’s website, a handful of affected locations were listed as “temporarily closed” or “unavailable” as of Tuesday morning.

Red Lobster has been struggling for some time. With rental and labor costs increasing in recent years, the chain is now considering filing for bankruptcy. A possible Chapter 11 filing could help Red Robster get out of some long-term contracts and renegotiate many of its leases, anonymous sources familiar with the matter told Bloomberg News last month.

Maintaining stable leadership has also proven difficult, with the company experiencing numerous ownership changes during its 56-year history. Earlier this year, Thai Union Group, co-owner of Red Lobster, one of the world’s largest seafood suppliers, announced plans to exit its minority investment in the restaurant chain.

Thai Union first invested in Red Lobster in 2016 and increased its stake in 2020. At the time of the January announcement of its divestment plan, CEO Thiraphong Chansiri said that the COVID-19 pandemic, Industry headwinds and rising operating costs had impacted Red Lobster and resulted in “prolonged negative financial contributions to Thai Union and its shareholders.”

For the first nine months of 2023, the Thai company reported a loss share of $19 million from Red Lobster.

And then there was the problem of endless shrimp. Last year, Red Lobster significantly expanded its iconic all-you-can-eat shrimp offering. But customer demand exceeded what the chain could afford, which is also believed to have contributed to the millions in losses.

TAGeX Brands’ auctions for more than 50 closed Red Lobster locations for which it is handling liquidation began Monday and will continue through Thursday. The sales are “winner takes all,” meaning one winner will receive all of the content for each location. Images on the TAGeX Brands website show this includes ovens, refrigerators, bar setups, dining room furniture and more.

TAGeX Brands called the liquidation “the largest restaurant equipment auction ever.” In a statement, founder and CEO Neal Sherman said the goal of these online auctions was “to prevent high-quality items from being thrown into landfills” and instead promote sustainable reuse.

As of Tuesday morning, bidding for 48 locations was still underway after four other sales closed Monday, TAGeX Brands told The Associated Press by email.

Red Lobster’s roots date back to 1968, when the first restaurant opened in Lakeland, Florida. In the decades that followed, the chain grew rapidly. Red Lobster currently boasts more than 700 locations worldwide.

ABC News

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