Red Lobster is weighing more restaurant closures as it works to cut costs and rebuild after filing for bankruptcy in 2024, according to comments from CEO Damola Adamolekun in an interview with The Wall Street Journal.
The seafood chain already closed about 130 locations during its bankruptcy process, shrinking its US footprint to 518 stores by the end of 2024.
Now, company leaders are reviewing leases and store performance to decide whether dozens more underperforming restaurants should shut their doors. The goal is simple: focus on stronger locations and lower expenses.
Adamolekun said customer visits are rising and sales are up about 10% compared with last year, NY Post reported.
Still, business has not returned to levels seen before bankruptcy, and many restaurants need updates.
“There’s a lot of positive signs, but we inherited a very damaged brand, so there’s still work to do to repair all of that,” he told the Journal.
Red Lobster Cuts Staff
Red Lobster filed for bankruptcy in May 2024 after suffering heavy losses. Sales had slowed, and an endless shrimp promotion priced at $20 created steep financial strain.
The company was also hurt by a 2014 real estate deal that sold off its property and left it paying high lease costs.
Because some leases cover multiple restaurants, closing a weak location can be tricky if it is tied to a stronger one.
According to RestaurantBusiness, after bankruptcy, the chain was acquired by Fortress Capital Management, which invested $70 million into the business.
Adamolekun, who previously led P.F. Chang’s through a restructuring, was hired in August 2024 to guide the turnaround.
Since then, the company has tried to win back customers. It added happy hour specials, brought back hush puppies, and introduced seafood boils that became a permanent menu item after strong demand.
These changes have helped improve traffic, but executives say more work is needed to stabilize the brand.
Red Lobster has also reduced expenses by cutting about 10% of its corporate staff and laying off roughly 200 restaurant employees, many of them managers.
The company is negotiating with seafood suppliers as tariffs raise the cost of imported seafood.
Originally published on vcpost.com
