Red Lobster closing more than 50 locations as future of longtime seafood chain comes into question

More than 50 locations of Red Lobster are being auctioned off amid questions about the stalwart seafood chain’s long-term future.

In a post Monday on LinkedIn, Neal Sherman, founder and CEO of TAGeX Brands, a liquidation firm, announced he was leading the closure of more than 50 Red Lobster locations, with the restaurants’ equipment to be auctioned off.

A web page dedicated to the liquidations showed closure locations across the U.S. including in Denver, Indianapolis, Rochester, New York; Sacramento, San Antonio, and San Diego.

The closures represent just a fraction of Red Lobster’s approximately 700 locations, and the company remains the largest seafood restaurant chain in the U.S.

But it continues to struggle amid a significant debt load, unfavorable lease terms, executive turnover, and ill-advised strategies including an all-you-can-eat-shrimp promotion last fall that resulted in a significant loss for the company.

Last month, CNBC reported Red Lobster was seeking a buyer as it looked to avoid a bankruptcy filing, but none had yet materialized at the time.

Earlier this year, Thai Union, the largest investor in Red Lobster, announced it was seeking to exit its position.

“The combination of Covid-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders,” said Thiraphong Chansiri, Thai Union Group’s CEO in a statement.

“After detailed analysis, we have determined that Red Lobster’s ongoing financial requirements no longer align with our capital allocation priorities and therefore are pursuing an exit of our minority investment.”

Red Lobster did not immediately respond to a request for comment.