Red Lobster (RL) closed dozens of its restaurants during its fall from grace. It’s since been taken over by a holding company with a reputation for pulling irons out of the… charcoal grill. But Red Lobster is now closing even more locations…
Red Lobster may be remembers as the restaurant ‘fail’ of the century. It filed for bankruptcy protection earlier this year after declaring a (US)$11 million loss for 2023.
The arrow that pierced its foot was shot from its own bow. The controversial Endless Shrimp promo-tion sucked its coffers dry. That escapade alone cost the company $22 million after being made a permanent offering on the RL menu. And Thai Union, the mega-partner the brand had relied on for very reasonably-priced fish and seafood, cut the Lobster adrift. Minus that crucial support, the end became clearer. And nearer.
A lifeline
Then, Fortress Credit Corp. – a holding company that specializes in rescuing sinking restos and turn-ing them around – bought Red Lobster. And advanced it $100 million to keep it afloat while the deal was finalized and some badly needed changes were made to the business model.
Fine tuning?
Some industry observers see the latest announcement of new RL locations as merely a ‘fine tuning’ measure; part of the overall revamp of the business model.
The new management team said that the latest locations slated for closure have been identified as, “likely to continue to drive losses.” The company, “does not anticipate needing [them] in order to operate their business going forward,” a court filing stated.
An additional 23 selected locations, spread across the US, will be shut down. That will leave around 500 RL locations operating going forward. A notable reduction from the 650 or so outlets the chain boasted before its near collapse.
My take
It’s no surprise to industry observers that Fortress is making perhaps cruel, but nonetheless neces-sary changes to the RL empire. Watch for more amendments, in other aspects of the business, as time goes on.
It’s still very early in the resurrection process. The Red Lobster phoenix hasn’t even fully formed, yet. Let alone, grown back its feathers…
Maggie J.