Red Lobster CEO admits more closures will happen as restaurant attempts a brand comeback

Red Lobster may be scaling back its footprint as it continues to claw its way out of bankruptcy, CEO Damola Adamolekun says.

Management for the seafood chain, which filed for bankruptcy in May 2024, is reviewing restaurant leases and closing underperforming sites to reduce costs and sharpen the company’s focus on stronger markets, Damola Adamolekun toldThe Wall Street Journal in an interview published Tuesday.

Despite a roughly 10 percent increase in sales compared with the prior year, Red Lobster has yet to return to pre‑bankruptcy performance levels, Adamolekun said, and lingering financial pressures mean getting smaller may be the most realistic path back to profitability.

The chain shuttered more than 100 restaurants across dozens of states during its 2024 Chapter 11 process and laid off hundreds of workers as part of earlier restructuring efforts. Red Lobster escaped bankruptcy in September 2024 after being acquired by RL Investor Holdings LLC and receiving approximately $70 million in fresh investment. This is also when Adamolekun became CEO, bringing new ideas to Red Lobster’s menu and marketing.

“There’s a lot of positive signs, but we inherited a very damaged brand, so there’s still work to do to repair all of that,” Adamolekun told the WSJ.

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Adamolekun, previously CEO of P.F. Chang’s, quickly became the public face of Red Lobster, promoting a “new day” for the brand through advertising campaigns. Under his leadership, the chain overhauled its menu, launched a happy hour to attract more customers and refreshed its marketing strategy.

To improve the in-restaurant experience, Red Lobster also introduced a “red carpet hospitality” program, directing hostesses to acknowledge guests from 10 feet away and engage with them when they are within 4 feet, aiming to elevate customer service and modernize the nearly 60-year-old brand.

Restaurants everywhere are struggling to get people to eat out, as customers are more careful with their money against a background of rising prices. Red Lobster has its own challenges, some going back years. In 2014, its previous owners sold off the chain’s buildings, leaving Red Lobster tied to complicated leases and rent payments that are still in place today.

Adamolekun said some restaurants could have closed a long time ago if it weren’t for these lease arrangements, which connect weaker locations to stronger ones. He didn’t say exactly how many restaurants might be affected or when changes would happen.

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The issue stems from 2014, when Red Lobster’s then-owner, Golden Gate Capital, sold most of the chain’s properties to reduce debt. While the sale generated immediate cash, it created long-term financial challenges for the company. The sale-leaseback agreements required Red Lobster to continue paying rent on hundreds of locations, including many that were underperforming.

These lease obligations often exceeded market rates, putting additional strain on the company’s finances and limiting its ability to close or relocate struggling restaurants. The arrangement tied Red Lobster to fixed costs regardless of a location’s performance, reducing operational flexibility and complicating efforts to restructure or optimize the chain’s portfolio.

Once Red Lobster deals with its weaker locations, Adamolekun said the chain could start growing again in areas where it doesn’t have many restaurants, like upstate New York and New England, and even expand internationally through franchises.

The company also plans to sell more of its branded products, like Cheddar Bay Biscuit mixes, in stores.

Red Lobster, which has 550 outlets, has had some hits, like its Seafood Boils, a mix of shrimp, vegetables, and other seafood served in a steaming bag. Even though prices start around $28 and go up to $70 for multiple servings, the boils went viral and helped boost visits.

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In July, Red Lobster saw an 18 percent increase in customer visits from the previous year, according to mobile analytics firm Placer.ai, according to the WSJ, and the Seafood Boils remain on the menu thanks to their popularity.

Looking ahead, Adamolekun says he plans to remodel some restaurants this year, with each upgrade costing about $500,000. Investors will put more money into the brand to make that happen.

Market research firm Datassential found the chain still has work to do on food quality, service, and overall experience, but customers are noticing improvements in value and are coming back more often.

“I watch the guest scores and the traffic improvement, because that ultimately determines the fate of the business,” Adamolekun told the WSJ.