Why Did Red Lobster Go Bankrupt? What Really Happened

Red Lobster went bankrupt because of a mix of problems that built up over about ten years. High rent, fewer customers, big debts and a money-losing Endless Shrimp deal all played a part. The chain filed for Chapter 11 bankruptcy in May 2024, right after closing at least 99 restaurants.

The good news for seafood fans: Red Lobster did not disappear. It came out of bankruptcy in September 2024 with new owners, and many restaurants are still open.

What is Chapter 11 bankruptcy?

Chapter 11 is a kind of bankruptcy that lets a company keep running while it fixes its money problems. It can close stores, get out of bad leases and work out new deals with the people it owes. It is not the same as shutting down for good.

Reason 1: It sold its buildings and then had to pay rent

For a long time, Red Lobster owned many of its restaurant buildings. In 2014, its old parent company, Darden, sold the chain to an investment firm called Golden Gate Capital. As part of that deal, much of the land and buildings were sold off and then rented back to Red Lobster.

That brought in cash at the time, but it left the chain paying high rent for years. When sales dropped, the rent bills stayed the same.

Reason 2: Fewer people came in

Casual dining chains have struggled as people eat out less, choose fast casual spots or order delivery. Red Lobster saw fewer guests over the years, and higher food and labor costs made each visit less profitable.

Reason 3: Endless Shrimp cost too much

Endless Shrimp was always a popular deal. In 2023, Red Lobster made it a regular menu item for $20. Far more people ordered it than expected, and many ate a lot of shrimp. Reports said the chain lost about $11 million in just a few months because of it.

Some people blamed the owner at the time, Thai Union, a large seafood company, saying it pushed shrimp deals that helped its own business. Thai Union denied doing anything wrong.

Reason 4: Lots of changes at the top

Red Lobster changed owners and leaders several times in a short period. That made it hard to stick with one plan for long.

Red Lobster owners over the years

Is Red Lobster still open?

Yes. A judge approved the sale, and Red Lobster left bankruptcy in September 2024 with a group of its lenders, led by Fortress Investment Group, as the new owner. Damola Adamolekun, a former leader at P.F. Chang’s, became CEO. The chain has fewer restaurants than before, so check that your local one is still open before you go.

Is Endless Shrimp gone?

Not completely. Red Lobster brings it back from time to time as a limited deal, usually around $19.99 to $24.99. Many people also come for the Cheddar Bay Biscuits, which are still a fan favorite.

See current prices on our Red Lobster menu with prices. Looking for other sit-down seafood or pasta? Try the Olive Garden menu, the Bonefish Grill menu or the Long John Silver’s menu.

Frequently asked questions

Why did Red Lobster go bankrupt?

Red Lobster went bankrupt because of high rent from selling its buildings in 2014, fewer customers, rising costs, heavy debt and a costly Endless Shrimp deal in 2023.

When did Red Lobster file for bankruptcy?

Red Lobster filed for Chapter 11 bankruptcy in May 2024, after closing at least 99 restaurants.

Is Red Lobster still open?

Yes. Red Lobster came out of bankruptcy in September 2024 under new owners, and many restaurants are open.

Who owns Red Lobster now?

Red Lobster is owned by RL Investor Holdings, a group of lenders led by Fortress Investment Group.

Did Endless Shrimp cause Red Lobster’s bankruptcy?

It was one part of the problem. Reports said the $20 Endless Shrimp deal lost about $11 million in 2023, but rent, debt and falling visits mattered too.

Does Red Lobster still have Endless Shrimp?

Red Lobster brings Endless Shrimp back as a limited time deal, usually priced around $19.99 to $24.99.

Prices are typical U.S. prices before tax and can vary by location. Menus Info is not affiliated with any restaurant mentioned. See how we check prices.