Red Lobster will have to shut down more than 100 additional restaurants if the company is unable to renegotiate cheaper rent for the buildings, court documents revealed.
After abruptly closing down 93 of its approximately 700 locations and filing for Chapter 11 bankruptcy in May, the seafood chain is “at risk of closing” 135 locations due to expensive leases, Restaurant Business reported.
A Red Lobster restaurant is shown September 13, 2016, in North Miami, Florida. (AP Photo/Wilfredo Lee)
The company reportedly filed for bankruptcy while having $300 million in debt, blaming the poor financial situation on inflation, failed promotions such as the $20 all-you-can-eat shrimp deal, as well as the cost of rent.
Red Lobster’s 22-year-old lease at the iconic Times Square location in New York is reportedly being doubled to $2.2 million a year, the New York Post reported.
A Red Lobster restaurant in Times Square in New York is seen on Friday April 30, 2010. (Richard Levine/Corbis via Getty)
While the company is attempting to hold on to the long-standing location, they only have a few weeks to agree to the new lease before it’s set to begin on June 30.
The business’s $20 shrimp promotion came after it experienced a $5.4 million loss in the second quarter of 2023, but the deal was so popular with customers that it failed miserably at increasing profits, Breitbart News reported.
Red Lobster in Leesburg, Florida, on May 15, 2023. (Stephen M. Dowell/Orlando Sentinel/Tribune News Service via Getty Images)
While foot traffic into the restaurants increased by 4 percent during the promotion, it ended up not being worth it as many people were coming in just for the cheap shrimp.
Even after the company attempted to get back on course with a price increase to $25 for the endless shellfish deal, they still experienced a staggering financial loss.
