Unexpected Layoffs and Closures: Red Lobster Restaurants Auction Off Equipment and Furniture
Red Lobster, a popular seafood chain, is facing unexpected closures and layoffs across the United States. TAGeX Brands, a restaurant liquidator, has announced that it will be auctioning off equipment and furniture from over 50 closed Red Lobster restaurants in various states. The auctions began on May 13 and will conclude on May 16.
The listing by TAGeX Brands includes locations in Alabama, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Texas, and others. Winning bidders will receive “the entire contents of the Red Lobster location they bid on.” This massive restaurant liquidation is being touted as the largest ever through TAGeX Brands’ online auction marketplace.
Danville, Illinois Mayor Rickey Williams Jr. expressed his shock and disappointment in a Facebook post. He revealed that the Red Lobster restaurant in his city had been closed abruptly, resulting in the layoff of the entire staff. Despite being rated number 15 out of over 600 stores for customer service and satisfaction the previous year, the restaurant’s parent company made this decision without prior notice. Mayor Williams also alleged that nearly 120 other Red Lobster stores have faced similar closures without warning.
The restaurant chain underwent changes when it was taken over by Golden Gate Capital. They sold their actual properties and started making the stores pay rent, which amounted to approximately $12,000 per month for the Danville location. Although the restaurant was profitable, it seems that the corporation’s financial requirements were not being met.
The COVID-19 pandemic has further compounded Red Lobster’s challenges. Thai Union Group PCL, a minority investor and strategic partner of Red Lobster since 2016, announced its intention to exit its minority investment earlier this year. In a news release, Thai Union cited a review of Red Lobster that identified the need for operational and financial improvements. The company’s CEO, Thiraphong Chansiri, stated that the combination of the pandemic, industry headwinds, higher interest rates, and rising material and labor costs had negatively impacted Red Lobster’s financial performance.
Thai Union reported a loss of $19 million from its Red Lobster investment in the first nine months of 2023. These challenges have led Thai Union to conclude that Red Lobster’s financial requirements no longer align with their capital allocation priorities.
Despite these recent setbacks, Red Lobster has a rich history. The first location was opened in Florida in 1968, and the chain expanded to Canada in 1983. Today, Red Lobster operates over 700 restaurants worldwide.
The closures and layoffs at Red Lobster highlight the challenges faced by the restaurant industry, particularly in light of the COVID-19 pandemic. Rising costs and changing consumer habits have put many establishments at risk. As restaurants continue to adapt to these evolving circumstances, it is essential for industry leaders to find innovative solutions to ensure their survival in these uncertain times.
