Red Lobster abruptly closed at least 50 of its restaurants across the United States, surprising customers and employees. Red Lobster is reportedly considering filing for bankruptcy.

The chain has hired a restructuring expert as its CEO, which could indicate an eventual bankruptcy.

TAGeX Brands, a restaurant liquidator, said that it would auction off goods from some of the Red Lobster restaurants that had closed.

“TAGeX Brands is proud to launch the largest restaurant liquidation EVER through its online auction marketplace,” Neal Sherman, CEO of TAGeX Brands, wrote in a LinkedIn post.

“The furniture, fixtures, and equipment from select Red Lobster locations must go ASAP!”

The mass closures are yet another evidence of Red Lobster’s woes, and it is the first time in the chain’s more than 50-year history that dozens of restaurants have closed at the same time.

Red Lobster was a casual dining pioneer, introducing reasonably priced seafood to middle-class consumers for the first time.

However, the business has decreased in recent years owing to a variety of causes, including corporate mismanagement, according to former executives and restaurant analysts.

Thai Union Group Takes $530 Million Loss

Thai Union Group, a Thai producer of seafood-based food products and a longtime Red Lobster supplier, acquired an unknown financial position in the business in 2020, becoming a prominent shareholder.

Under Thai Union’s leadership, Red Lobster went through four CEOs and implemented an all-you-can-eat shrimp bargain last year, which slowed table service and reduced Thai Union’s earnings.

The offer has been running for more than 18 years at Red Lobster, but it has now become a permanent staple on the menu. “We need to be much more careful,” Thai Union CEO Thiraphong Chansiri stated in November about the shrimp contract.

Thai Union Group said this year that it was divesting from Red Lobster and would incur a $530 million loss on its investment. The chain, which has 27 restaurants in Canada and 649 in the United States, has not publicly commented on the closures.

In 2023, the company reportedly lost millions of dollars after its unlimited shrimp deal proved unexpectedly popular with clients.

The all-you-can-eat menu choice was originally only available for a limited period, but when the company made it permanent, consumers took advantage and consumed more shrimp than the restaurants could afford.

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SOURCE – (AP)

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