Red Lobster could shut down 135 more restaurants in rent negotiations after filing for bankruptcy : report
Red Lobster is in danger of shutting down 135 more restaurants if the company is unable to renegotiate the terms of its leases, according to bankruptcy documents filed last week.
The filings list 228 rejected leases that the company has flagged as money-losing propositions if they continue without adjustments, according to Restaurant Business.
The list of rejected leases includes several of the 93 Red Lobster locations that were shuttered abruptly on May 13.
The court filings suggest that around 135 more Red Lobster locations are in danger of closing, according to the publication.
The Post has sought comment from Red Lobster.
Last week, The Post reported that Red Lobster was working to keep its Times Square location open.
The seafood chain has just a few weeks to renegotiate the terms of its lease, which expires at the end of the month, with the landlord.
SL Green and RXR, the companies that own the property at 5 Times Square, are seeking to double the rental income it takes in from the restaurant, The Post reported last week.
If Red Lobster wants to continue operating in Times Square, it will have to fork over $2.2 million annually in rent for the three-level, 16,482-square-foot space.
A real estate broker who chose not to be identified told The Post that Red Lobster is likely to now be paying under $1 million a year for the corner space at West 41st Street and Broadway.
Red Lobster, which filed for Chapter 11 bankruptcy in Florida on May 19, is investigating the role its majority owner, Thai Union, played in the restaurant chain’s “endless shrimp” promotion that caused $11 million in losses, court documents showed.
Red Lobster said the debacle was part of a pattern of mismanagement by the global seafood company that owns most of its equity and supplies shrimp to its restaurants.
Red Lobster, with about 550 casual dining restaurants in the US, had offered a $20 endless shrimp dish as a limited-time promotion.
Former CEO Paul Kenny made it a permanent, year-round option in May 2023 despite “significant pushback” from other management team members, the documents said.
Some Red Lobster restaurants soon faced major shrimp shortages. Around the same time, it eliminated two breaded shrimp suppliers, leaving Thai Union with an exclusive deal that led to higher costs, current CEO Jonathan Tibus wrote in the filing.
“Thai Union exercised an outsized influence on the company’s shrimp purchasing,” Tibus wrote. “The Debtors are currently investigating the circumstances around these decisions.”
Thai Union could not immediately be reached for comment.
Red Lobster, with $294 million in debt, plans to close some underperforming restaurants and sell the rest to a group of its lenders including Fortress Investment Group.
Red Lobster, based in Orlando, Florida, is one of the world’s largest seafood restaurants with 54 outlets outside the United States and about 36,000 employees.
It purchases 20% of all North American lobster tails and 16% of all rock lobsters sold worldwide, the documents showed.
Red Lobster said its business has suffered from poor management decisions, high inflation, unsustainable rent costs and increased competition.
It posted a $76 million net loss in 2023.
With Post wires
