Is Red Lobster Going Out of Business? (2025 Update)

Introduction

If you’ve typed in the search bar “is Red Lobster going out of business?”, you’re definitely not alone. The beloved seafood chain has weathered stormy seas lately, including a bankruptcy filing in 2024 and dozens of restaurant closures. But here’s the thing: the brand is not disappearing. Rather than a complete shutdown, the chain is undergoing a significant restructuring and repositioning itself for the future. In this article we break down exactly what’s going on, why there’s confusion, and what you as a diner (or franchise observer) should know in 2025.

Short Answer: No — It’s Not Going Out of Business (But It’s Changing

Let’s cut to the chase:

• In May 2024, Red Lobster filed for Chapter 11 bankruptcy protection. CNBC+2The Washington Post+2
• By September 2024, a court-appointed organisation plan will be under new ownership. Red Lobster+2CNBC+2
• The chain is looking to keep about 544 locations open in the U.S. & Canada under its new structure. https://www.cleveland19.com+2CNBC+2
  So yes — closures have happened, and changes are fundamental. But a complete business exit? Not the case.

Why Many Believed Red Lobster Was Closing

Understanding the rumours requires digging into what happened, so we can see how the “closing down” narrative took hold.

1. Major Store Closures

Before the bankruptcy filing, Red Lobster closed dozens of underperforming locations. For example, around 100+ closures were reported before the formal restructuring. CNBC+2The Washington Post+2 This created visible signs that something was deeply wrong.

2. The Bankruptcy Filing

The Chapter 11 filing is dramatic and to many people signals “company going under”. The filing detailed huge liabilities, problem leases, and operational issues. CNBC+1 When brands file for bankruptcy, it often triggers “the end is near” panic.

3. A Financial Misstep “Endless Shrimp”

One of the key triggers was the now‑infamous “Endless Shrimp” promotion, which became permanent in 2023 and reportedly caused significant losses and supply chain chaos. Restaurant Dive+2CNBC+2 When those kinds of mistakes hit a brand, it feeds narratives of collapse.

4. High Costs and Market Shift

Red Lobster, like many casual dining chains, struggled with rising costs (food, labour, leases), changing consumer habits (more delivery, more fast‑casual), and a large number of underperforming restaurants. Restaurant Dive+2CNBC+2

All these factors combined made it easy for the “is it going out of business?” fear to spread. But let’s now unpack the current reality.

What’s Actually Going On in 2025

Here’s the up‑to‑date status of Red Lobster in 2025: what has changed, what is the plan, and how things are shaping up.

Ownership & Leadership

• The new owner is RL Investor Holdings LLC (backed by Fortress Investment Group), which acquired Red Lobster as part of the re‑org. Red Lobster+2PR Newswire+2
• The new CEO is Damola Adamolekun (appointed mid‑2024), who has stated a long‑term investment plan of over $60 million and a focus on stabilising the brand. Red Lobster+2https://www.cleveland19.com+2

Store Footprint & Status

• Roughly 544 restaurants are slated to remain open across the U.S. & Canada under the new ownership plan. CNBC+1
• The company has rejected many leases for underperforming locations as part of its restructuring, indicating some closures are permanent. CNBC+1
• They are also undertaking a brand refresh: revamped menu items, returning fan favourites, and a new tech/ops focus for greater efficiency. Food & Wine+1

Financial & Operational Changes

• The bankruptcy filing listed assets and liabilities in the hundreds of millions, and highlighted issues like high rent, under‑performing stores, and failed strategic initiatives. The Street+1
• The brand has committed to a restructuring path: shedding bad leases, signing new leases, and stabilising the operation. Red Lobster

In short, the business is still alive, but significantly reshaped.

Reasons Behind The Trouble – A Closer Look

To fully understand the story, we need to dig into the significant root causes of Red Lobster’s crisis.

High Lease & Real‑Estate Burden

In previous years, the company had engaged in a sale‑leaseback model (selling property assets and then leasing them back), which substantially increased fixed costs. CCTLA+1 Underperforming stores plus high above‑market rent made a heavy drag.

Promos That Backfired

The “Endless Shrimp” promotion, initially a limited‑time offer, was made permanent in 2023. It generated huge customer demand b, ut also supply chain and cost issues. Restaurant Dive+1

As one employee noted on Reddit:
“The endless shrimp … created both operational and financial issues for the Debtors.” Reddit

Rising Costs & Changing Dining Habits

The broader environment hurt too: rising food, shrimp, labour costs, inflation, and changing consumer preferences toward delivery and fast‑casual models. CNBC+1

Oversized Footprint

The brand had hundreds of locations, some of which were underperforming. Traditionalizing the footprint was a major challenge. CNBC+1

What It Means for Customers & Franchisees

So what should you, as a customer or someone watching the brand, take away from all this?

For Customers

• If you love Red Lobster, many of its restaurants are still operating. The brand is not disappearing.
• Some local closures have occurred; it’s smart to check your local restaurant’s status if you’re planning a visit.
• The menu may change: some promos like the old “Endless Shrimp” have been pulled back or reimagined. The chain is focusing on sustainable growth. Food & Wine

For Franchisees & Investors

• The restructuring signals a pivot to profitability and smarter operations.
• But note: the risk remains. Underperforming units are being closed or leases rejected.
• If you’re considering partnering with the brand, it’s helpful that the new ownership is injecting capital and seeking long‑term stability.

Future Outlook: What’s Next for Red Lobster?

Looking ahead, here’s what the chain must do (and what to watch) if it hopes to thrive again.

Investment & Brand Refresh

The new owners committed over $60 million for reinvestment. https://www.cleveland19.com+1
Expect menu upgrades (new dishes and returning favourites), an enhanced customer experience, and operational/tech improvements. Food & Wine

Selective Growth

Rather than massive expansion, the brand might optimise stores, close locations, and maybe adopt robust franchising models.

Market Relevance

Casual dining is under pressure. Red Lobster will need to adapt to trends: delivery, take‑out, value‑driven dining, loyalty programmes, and sustainability.

Watch Metrics

If you’re tracking the brand: look for same‑store sales growth, number of net new openings (or closings), promotional stability (no more “loss‑leading” deals), and positive investor/owner commentary.

If all goes well, the brand could reposition itself as a “leaner, smarter” version of its former self — not disappearing, but evolving.

FAQ

Q1: Is Red Lobster closing all its locations?
A1: No. The brand is not shutting down completely. While some locations have closed permanently, around 544 restaurants are expected to remain open under the new plan.

Q2: Did Red Lobster go bankrupt?
A2: Yes — the chain filed for Chapter 11 bankruptcy in May 2024. But bankruptcy is a restructuring process, not an automatic shutdown. CNBC+1

Q3: Will the menu/promotions still be good?
A3: The menu is being refreshed. Some old promotions (such as the “Endless Shrimp” permanent deal) have been scaled back because they placed financial strain on the company. The new strategy focuses on value and sustainability. Food & Wine

Q4: What should I do if my local Red Lobster is closed?
A4: If your location is closed, it may be part of the restructuring/lease rejection. You could check the brand’s official website for the nearest open area, or contact the store for details.

Q5: Is it a good idea to invest in or franchise with Red Lobster now?
A5: It depends. The brand is under new ownership with a capital injection and is stabilising. But you should perform due diligence: look at local market performance, lease terms, brand reputation in your area, and projected costs vs revenue.

Conclusion

So there you have it: the complete picture behind the keyword “is Red Lobster going out of business.” The short answer? No, it’s not going out of business — but yes, it has been through significant upheaval. The chain filed for bankruptcy, closed many locations, and is being reshaped under new ownership and leadership. Now, in 2025, it is actively repositioning itself.