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Red Lobster closes multiple locations as company prepares to file for bankruptcy
Red Lobster abruptly closed at least 99 locations across the country with restaurants closing its doors in at least 27 states.
Tagex Brands, a company that runs restaurant liquidation auctions, told ABC News that Red Lobster recently contacted them to auction off items from 52 locations that will be closing.
The popular seafood restaurant chain started Eyeing Chapter 11 to Consolidate Debt last month. Wall Street Journal reported Tuesday that the company is now expected to declare bankruptcy “as early as next week,” according to people familiar with the matter.
In this undated file photo, a Red Lobster restaurant is shown.
Jeff Greenberg/UIG via Getty Images, FILE
The decision comes just months after a major investor blamed Red Lobster’s failure “Endless Shrimp” Promotion for costing the restaurant chain millions in losses.
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During an earnings call last year, Thailand-based former Red Lobster investor Thai Union Group shared that menu promotion contributed to its operating loss of more than $11 million in the third quarter.
Ludovic Garnier, chief financial officer of Thai Union Group, told ABC News this week: “Something that was different from our expectation is that the proportion of people who selected this promotion was much higher compared to the expectation.”
In this July 24, 2014, file photo, a seaside shrimp combo dish is shown at a Red Lobster restaurant in Yonkers, New York.
Bloomberg via Getty Images, FILE
Financial reporter and affordable lifestyle expert Jennifer Streaks explained that because “consumers are now looking for value when they leave the house,” she thinks “consumers actually ate more than Red Lobster could afford.”
With inflation driving more Americans to save pennies, experts are seeing consumers flock to restaurants that can offer value for money, and fast casual chains are seeing a surge in popularity.
“Red Lobster is not a fast casual environment. It may be fast seafood, but seafood is still [an] expensive dining experience,” Streaks added.