Red Lobster is contemplating the closure of additional restaurants as it reassesses its operations in the wake of its 2024 bankruptcy.
The seafood chain shuttered approximately 130 locations when it filed for bankruptcy, according to CEO Damola Adamolekun. He mentioned in an interview that the company is exploring ways to cut costs and is reviewing its locations and leases.
Adamolekun noted that while foot traffic has improved, and sales have risen by around 10% compared to last year, they haven’t returned to pre-bankruptcy levels, indicating that many stores still require renovations.
“There are definitely some positive signs, but we took over a brand that was quite damaged, and there’s still a lot of work ahead to fix that,” he shared.
Red Lobster declared bankruptcy in May 2024, facing significant losses due to declining sales and ongoing issues related to shrimp trading that initially cost the company $20.
Another complication arises from a 2014 decision to sell off the chain’s properties while charging lease fees. Some leases are tied to multiple restaurants, and Adamolekun mentioned that these arrangements are linked to stronger-performing locations, complicating the closure of underperforming stores.
It appears that Red Lobster would ideally like to decrease its number of locations by a few dozen to focus on those that perform better, according to insights from discussions within the company.
Adamolekun took on the role of CEO in August 2024, after leading restructuring at PF Chang’s. In recent months, the company has let go of about 10% of its workforce and is negotiating with seafood suppliers, as increased tariffs are raising the cost of imported seafood.
The CEO also mentioned that Red Lobster might look to expand in areas like upstate New York and New England, where its presence is rather limited, provided they can tackle challenging markets.
Besides offering Red Lobster-branded products like Cheddar Bay biscuit mix through retail outlets, there’s also consideration for franchising in international markets.
