Red Lobster workers blindsided as seafood chain abruptly closes at least 50 restaurants including 14 in NY, NJ

Red Lobster abruptly closed the doors of at least 50 restaurants nationwide on Monday including a dozen in New York and New Jersey, blindsiding seafood chain employees.

TAGeX Brands, a restaurant liquidator, revealed it is auctioning off kitchen items and furniture from shuttered Red Lobster locations as part of its “largest restaurant equipment sale ever.”

Fourteen locations in New York and New Jersey were “temporarily closed” for the foreseeable future, according to Red Lobster’s website, as the struggling company weighed a possible Chapter 11 bankruptcy filing.

Among the shutdown locations are: Lakewood, NY; Buffalo, NY; Amherst, NY; Williamsville, NY; Rochester, NY; Poughkeepsie, NY; Stony Brook, NY, Kingston; NY; Scarsdale, NY; Nanuet, NY; Ledgewood, NJ; Lawrenceville, NJ; East Brunswick, NJ; Bridgewater, NJ.

Red Lobster which has 649 locations nationwide  has not publicly commented on the closures.

Employees and customers at a Red Lobster in Buffalo were greeted with a sign taped on the glass window that marked the restaurant’s closure, according to WKBW.

“This location is closed. We look forward to serving you at another Red Lobster location in the future,” the sign read.

Ramon Garcia, an employee, told the outlet that he learned of his store’s shutdown from a fellow worker.

Corporate officials allegedly only reached out when they informed the workers that they had three days to clear everything out of the location.

“This happened out of nowhere. All the people that we work with, they’re losing their jobs and not knowing what to expect after that,” Garcia said. “It’s taking a toll on them.”

“I didn’t know we were going bankrupt, but I kind of knew, if you know what I’m saying,” Garcia said. “They were cutting back on a lot of stuff.”

Last month, Red Lobster mulled a decision to file for Chapter 11 bankruptcy to restructure their debts, according to a report.

The seafood chain has sought advice from law firm King & Spalding on how to shed some long-term contracts and renegotiate a chunk of its leases, people with knowledge of the matter told Bloomberg.

In January, Thai Union Group PCL, a Thailand-based seafood giant that owns Red Lobster, revealed its intention to pursue an exit of its minority investment, blaming rising costs and the COVID-19 pandemic.

The combination of COVID-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders, Thai Union Groups CEO Thiraphong Chansiri said.

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After detailed analysis, we have determined that Red Lobsters ongoing financial requirements no longer align with our capital allocation priorities and therefore are pursuing an exit of our minority investment.

Thai Union paid $575 million to Golden Gate Capital, Red Lobster’s then-parent company, for a 25 percent stake in the restaurant chain in 2016.

The group claimed Red Lobster logged a share loss of $19 million during the first nine months of 2023.

The restaurant also blamed the “Ultimate Endless Shrimp” deal, which allows customers to spend $20 on all-you-can-eat shrimp, for its $11 million loss in the third quarter last year.

Union Group CFO Ludovic Regis Henri Garnier told Restaurant Business Magazine that the initiative was intended to help “boost traffic” but “it didn’t work” as the prices were raised to $25.

We want to keep it on the menu. And of course we need to be much more careful regarding what are the entry points and what is the price point we are offering for this promotion.

In March, Red Lobster appointed veteran bankruptcy expert Jonathan Tibus as its new CEO.

Red Lobster has since sought a buyer to take over operations, according to CNBC.

The outlet reported last month that one firm was interested in purchasing the company, but the deal never came to fruition.