Seafood chain Red Lobster has abruptly closed more than 50 stores across the country, leaving hundreds of people jobless and raising concerns about the company's financial stability. The closure, which took place without any announcement, shocked many people.
Following the sudden closure, liquidation firm TAGeX Brands immediately announced an online auction of kitchen equipment and other contents of the closed Red Lobster restaurants.
WTHR reports that TAGeX Brands CEO Neal Sherman described this as “the largest restaurant liquidation in history,” acquiring the contents of all Red Lobster locations up for auction via LinkedIn. Bidders were invited to do so.
Initially, 48 stores were up for auction, but Red Lobster's website lists more than 90 stores in the U.S. as “temporarily closed,” highlighting the scale of the closures. Social media platforms were flooded with posts from confused employees shocked to have lost their jobs without prior notice.
The closure comes amid rumors of bankruptcy surrounding the seafood chain, Salon reported.
The chain is considering filing for Chapter 11 bankruptcy protection to deal with mounting debts following its ill-fated Endless Shrimp promotion. According to Bloomberg, the chain is considering bankruptcy to deal with a shortfall of more than $11 million caused by the promotion.
Red Lobster's limited-time Endless Shrimp promotion was permanently added to the menu in June 2023, resulting in a loss of $12.5 million in the fourth quarter.
The decision to consider bankruptcy was made following advice from legal experts at King & Spalding, which aimed to restructure the chain's debt while reviewing long-term contracts and leases. Fortress Investment Group, a major lender to Red Lobster, is actively engaged in ongoing debt negotiations, Good Morning America reported.
The company was founded on January 18, 1968. Bilderden opened the first Red His Lobster in Lakeland, Florida. By 1970, the company began opening locations across the country with support from General Mills. According to ABC News, Red Lobster currently has more than 700 stores around the world.
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