Red Lobster faces having to close more than 100 more restaurants if it can’t renegotiate rents for its buildings for cheaper prices, court documents show.
The seafood chain abruptly closed 93 of its roughly 700 locations in May and filed for Chapter 11 bankruptcy protection, after which it said 135 locations were “at risk of closing” due to high lease costs, Restaurant Business reported. report.
The company reportedly filed for bankruptcy with debts of $300 million, blaming inflation, the failure of promotions like $20 all-you-can-eat shrimp, and rising rents for its poor financial situation.
Red Lobster’s 22-year lease on its iconic Times Square restaurant in New York City will reportedly double its rent to $2.2 million per year. New York Post report.
A view of a Red Lobster restaurant in Times Square in New York City on Friday, April 30, 2010. (Richard Levine/Corbis via Getty)
The company is looking to hang on to its longtime location but has just a few weeks to agree to a new lease, which starts on June 30th.
Business $20 shrimp promotion The deal comes after the company posted a $5.4 million loss in the second quarter of 2023, but the deal was so well-received by customers that it failed miserably to boost profits, Breitbart News reported.
Red Lobster in Leesburg, Florida, May 15, 2023. (Stephen M. Dowell/Orlando Sentinel/Tribune News Service via Getty Images)
During the promotion, restaurant traffic increased by 4 percent, but in the end the promotion wasn’t worth it because many customers came just for the cheap shrimp.
The company tried to get back on track by raising the price of its endless shellfish sale to $25, but still suffered huge losses.
