What The Red Lobster Closures Mean For The Chain
Red Lobster has unexpectedly closed dozens of restaurants across the country. While this may mean bad news for the seafood chain that once employed the likes of Chris Rock, Red Lobster's partnership with TAGeX Brands proves that one restaurant's trash is, indeed, another person's treasure.
On May 13, the contents of 48 Red Lobster restaurants were put up for action by TAGeX Brands, a company that specializes in asset liquidation and equipment resale following business closures. Although Red Lobster has yet to make a statement about the sudden development, TAGeX's founder and CEO Neal Sherman addressed it in a LinkedIn post, calling it the brand's "largest restaurant liquidation ever." Sherman wrote, "The furniture, fixtures, and equipment from select Red Lobster locations MUST GO ASAP." He went on to explain that Red Lobster's auction would be handled differently than others listed on the online marketplace. In what he referred to as a "winner takes all" situation, folks would be vying for everything inside of a particular restaurant rather than individual pieces of equipment.
The newly-closed locations are scattered across 21 states including California, Colorado, Maryland, New York, and Florida. As of this writing, some of the bids remain as low as $100 — a mind-bogglingly low price for the entire contents of a recently-functioning restaurant. While this could be an exciting prospect for restaurateurs and start-ups, it bodes poorly for the seafood chain's prospects.
Is this the end of Red Lobster?
Rumors that Red Lobster's future could be on the rocks began as long ago as 2013, but the company quickly shut these down back then. In the years that followed, however, seafood chains across the country started disappearing. The COVID-19 pandemic only fueled this fire, and in 2020, a credit rating business predicted that Red Lobster would fare poorly against the changing tides of the restaurant industry.
"It's got a big veto vote," William Fahy, vice president and senior credit officer for Moody's Investors Service, told SeafoodSource at the time. He then explained, "When a group of people go out to eat, if one person doesn't want seafood, it is vetoed." Red Lobster gradually began closing locations, starting with four in 2020, another five in 2021, and eight more in 2023.
In April 2024, Bloomberg reported that Red Lobster had designs to file for Chapter 11 bankruptcy. This came after Thai Union Group, which had become Red Lobster's 49% shareholder in 2020, announced in January 2024 that it would be divesting from the company. Still, with approximately 650 locations remaining, the restaurant chain that brought us popcorn shrimp and the point-of-sale system has yet to publicly throw in the towel.