Seafood restaurant chain Red Lobster will file for bankruptcy next and close 50 stores. According to media reports, the contents of those stores will be liquidated.
The decision was made because Red Lobster had expenses, leases, and debts it could not afford. Experts believe that most of the chain will remain intact because the bankruptcy will allow it to force landlords to offer less expensive leases.
According to The Wall Street Journal, store closures have already started. Before Red Lobster began the process, it had 650 locations. Revenue in the United States last year was pegged at $2.2 billion.
The process was brutal for some stores. According to The New York Times, about 50 stores will be completely liquidated. The paper reported that whoever wins the bid for a particular restaurant will receive everything inside it.
Red Lobster did not have many of the advantages of larger fast-food chains. McDonald’s has over 13,000 stores, $25 billion in revenue, and a net income of over $8 billion. (The fastest-growing brands in each state this year include up-and-coming restaurant chains.)
According to several experts, some of Red Lobster’s problems were related to COVID-19. People who left during the pandemic never came back. However, new leases and lower debt services mean it has another chance.
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