Red Lobster has been a beloved seafood chain since it started in Orlando, Florida, in 1968. With a presence across most of the United States and various other parts of the world, Red Lobster had over 700 locations as of 2020. With rumors circulating, fans of the chain are wondering, is Red Lobster closing its doors for good?
However, there have been rumors about Red Lobster shutting down since at least the mid-2010s.
Red Lobster has changed owners several times throughout the years, and reports continue to surface that the chain is facing financial difficulty. Further, recent times have seen many individual Red Lobster restaurants close.
Red Lobster’s CEO has often come out to say the chain isn’t closing and that they’re not planning on planning locations. However, the COVID-19 pandemic has been tough on a lot of restaurants, including Red Lobster.
A few ominous signs have popped up in the news around the restaurant in the past couple of years, leaving many fans worried.
So, Is Red Lobster Actually Closing?
At this time, no, it doesn’t look like Red Lobster is actually closing, although the restaurant chain is definitely struggling.
In spring and summer 2020, at the height of the COVID-19 pandemic, a few Red Lobster locations shut down permanently. However, in response to the rumors, the chain would be shutting down.
In the reaction, CEO Kim Lopdrup stated that he didn’t foresee mass closures of restaurants.
That statement has remained more or less true. The restaurant reported a 2% loss in 2019, and that only would have gotten worse during the pandemic, but the business appears stable and operating as normal.
Since Lopdrup’s statement, several more locations have shuttered, but there has been no further word from the corporate office of anything widespread. Open restaurants are generally operating as usual, although many are seeing difficulties with staffing.
In 2021, Red Lobster announced that they had completed refinancing existing debt, which would indicate that the chain is in at least decent financial health. However, Kim Lopdrup also announced that he was stepping down.
Times of transition will probably lead to more rumors, but it appears that Red Lobster is safe until informed otherwise.
Where Did These Rumors Come From?
The rumors about Red Lobster closing seem to have started in earnest around 2013. At that point, analyst reports saw that the chain was struggling.
This paired with the news that their ownership group, Darden Restaurants (who also own the chains Eddie V’s and The Capital Grille), was looking to sell the chain off.
Red Lobster’s leadership spoke out against the rumors, but they lingered well past when Golden Gate Capital acquired the entire chain in 2014.
The business at Red Lobster remained more or less stable until the coronavirus pandemic hit in the early part of 2020. Like all restaurants, Red Lobster suffered considerable losses.
Rumors regarding the chain’s demise came up again, likely in part due to the difficulties they’d had in the past. The fact that the business hasn’t been growing as quickly as other competitors likely played a part in this fresh round of rumors.
Will It Close in the Future?
At this time, it’s impossible to tell. But, even years into the global pandemic, COVID-19 continues to affect all businesses, especially the restaurant industry.
For the moment, Red Lobster closings seem like they’re limited to individual restaurants, but the chain’s future is a little bit up in the air.
While Red Lobster is on the search for a new CEO, it remains unclear what that new leadership and the ownership see as the future. In addition, the global supply chain is very much an issue, which continues to impact Red Lobster, its’ employees, and its offerings.
It’s not generally seen as a great sign when closing rumors surround a chain restaurant. But, especially where a venture capital firm owns Red Lobster, it will likely remain in a bit of a sticky position for the foreseeable future.
Other Restaurant Closings
The COVID-19 pandemic has affected many chain restaurants. While few have shut down operations, many are similar to Red Lobster in that they had to take drastic measures to stay in business.
Bar Louie declared bankruptcy in January 2020, closing about half of its 90 locations before selling the business to its lenders.
Souplantation and Sweet Tomatoes were part of the same chain. Unfortunately, the pandemic hit this chain particularly hard, and they had to liquidate all their assets and shut down all locations in May 2020.
Similarly, California Pizza Kitchen declared bankruptcy in mid-2020. They used the opportunity to shut down some unprofitable locations before coming out of bankruptcy and resuming operations a few months later.
Two more restaurants, Sizzler and Ruby Tuesday, faced similar fates. As a result, both declared bankruptcy in 2020 and took a step back to reevaluate operations and shut down restaurants. Both chains are still operating as of early-2022.
While Red Lobster’s long-term future is definitely murky, they remain operating and relatively strong.
Fans of the chain have been sad to see a percentage of locations shut down, but, for the most part, Red Lobster has remained open and serving fans worldwide. So despite the rumors, it’s unlikely diners would notice any changes while they’re at the restaurant.
With the lingering effects of COVID-19 and an impending change, what does the future hold for Red Lobster? No one can say for sure, not even industry experts.
But, at the least, if you’re a Red Lobster supporter, get out to your local location and enjoy a meal, whether you’re getting it to go or dining in.