After submitting for chapter, closing dozens of places, and going through mounting losses, a once-iconic seafood chain is now contemplating additional restaurant shutdowns to stabilize its enterprise and return to progress.
For a lot of clients, the chain’s monetary troubles signaled the potential finish of an period, taking together with it its Cheddar Bay Biscuits and the favored Infinite Shrimp promotion. As an alternative, the corporate has spent the previous two years preventing for a comeback, aiming to rebuild its model and win again clients by restructuring operations and chopping prices.
For practically 68 years, Crimson Lobster has constructed its fame on providing inexpensive, high-quality seafood and has expanded to greater than 500 places worldwide. But the very technique of premium choices at low costs that fueled its progress finally turned too troublesome to maintain.
Crimson Lobster plans extra restaurant closures in 2026
After shuttering round 130 eating places throughout its Chapter 11 chapter restructuring, Crimson Lobster is now reviewing its actual property portfolio and contemplating extra closures in 2026. The aim is to cut back prices and give attention to higher-performing markets.
Lots of the chain’s present challenges hint again to 2014, when the personal fairness agency Golden Gate Capital acquired Crimson Lobster from Darden Eating places (DRI) for $2.1 billion. To assist finance the deal, the corporate bought its actual property properties for $1.5 billion in a sale-leaseback transaction.
Whereas the transfer offered short-term liquidity, it left the chain paying substantial hire, growing operational prices. By 2023, annual lease obligations had climbed to about $190.5 million, roughly 10% of its income, with greater than $64 million tied to underperforming places, in accordance with the chapter submitting.
Crimson Lobster ended 2024 with roughly 528 places. Nonetheless, some leases bundle a number of eating places, making it troublesome to shut weaker shops with out affecting stronger ones.
“Much of the liquidity from the sale-leaseback went toward paying dividends to private equity investors rather than addressing systemic operational issues or adapting the menu and brand to shifting market demands,” wrote College of Pennsylvania Professor of Operations, Data & Selections Gad Allon on Substack. “This misallocation of resources underscores the risks of prioritizing short-term gains over strategic reinvestment.”
Crimson Lobster is reviewing extra restaurant closures in 2026.
Richard Levine/Corbis through Getty Pictures
Crimson Lobster’s new turnaround technique
Since rising from chapter, Crimson Lobster has revamped its menu and advertising and marketing to raised align with shifting shopper preferences and evolving traits.
Latest menu modifications
- Relaunching Pleased Hour and seasonal cocktails
- Introducing Create Your Personal Final Feast
- Completely including Seafood Boils
- Bringing again the fan-favorite hushpuppies
Crimson Lobster CEO Damola Adamolekun instructed The Wall Road Journal (WSJ) in an interview that gross sales are up round 10% from final yr, although the chain has not but returned to pre-bankruptcy ranges and lots of places nonetheless require renovations.
The corporate has been chopping prices in different areas of its enterprise. In late 2025, Crimson Lobster laid off round 10% of its company workforce and 200 restaurant workers, in accordance with Bloomberg. The WSJ additionally reported that the chain is renegotiating with its distributors amid rising seafood costs, partly because of tariffs.
Business analysts warn that aggressive cost-cutting can backfire.
“When restaurants cut labor to manage costs, service suffers. When they reduce food quality to preserve margins, customer satisfaction declines. When they defer maintenance to conserve cash, the dining experience deteriorates,” mentioned analysts on the Worth Creation Innovation Institute.
Crimson Lobster Chapter 11 chapter
Crimson Lobster filed for Chapter 11 chapter safety in Could 2024, having collected practically $300 million in debt. The corporate cited rising prices, declining shopper visitors, and important monetary losses from its $20 all-you-can-eat shrimp promotion, which alone contributed to an $11 million quarterly loss.
Extra Restaurant Closures:
- Burger chain closes historic location after 35 years
- 30-year-old pasta chain declares 35 restaurant closures in 2026
- 53-year-old restaurant chain is quietly closing places nationwide
The chain exited chapter 4 months later below new possession by RL Investor Holdings LLC, after receiving court docket approval for its restructuring plan.
As a part of its turnaround, Crimson Lobster appointed then-36-year-old Damola Adamolekun as CEO in August 2024, following a string of short-lived CEOs, every of whom served for lower than a yr.
Restaurant chains face industry-wide pressures
Crimson Lobster shouldn’t be alone in its struggles. A number of well-known chains have filed for Chapter 11 chapter from 2024 by 2026.
Latest Chapter 11 restaurant bankruptcies
- FAT Manufacturers: Mother or father firm for 18 manufacturers, together with Fatburger, Johnny Rockets, Spherical Desk Pizza, Twin Peaks, Fazoli’s, and Spherical Desk Pizza filed January 2026 (Supply: FAT Manufacturers)
- Bravo Brio Eating places: Mother or father firm of Bravo Italian Kitchen and Brio Italian Grille filed a second time in August 2025 (Supply: Restaurant Dive)
- Hooters: Filed March 2025 (Supply: Kroll)
- On The Border Mexican Grill & Cantina: Filed March 2025 (Supply: Nation’s Restaurant Information)
- TGI Fridays: Filed November 2024 (Supply: TGI Fridays)
- Buca di Beppo: Filed August 2024 (Supply: RetailWire)
- Rubio’s Coastal Grill: Filed a second time in June 2024 (Supply: Restaurant Dive)
- Tijuana Flats: Filed April 2024 (Supply: Restaurant Enterprise)
Many of those chains share comparable challenges, together with massive footprints, heavy lease obligations, declining foot visitors, and excessive meals and labor prices.
Costs for meals away from dwelling climbed 4% within the 12 months ending January 2026, in accordance with current U.S. Bureau of Labor Statistics knowledge.
Over the previous 5 years, meals and labor prices for the typical restaurant have every elevated by about 35%, in accordance with the Nationwide Restaurant Affiliation.
Associated: McDonald’s unveils 2026 menu as gross sales rebound
To offset these surges, menu costs rose a median of 31% between February 2020 and April 2025, in accordance with U.S. Bureau of Labor Statistics knowledge.
As costs rise, buyer visitors declined 1% throughout the foodservice {industry} through the quarter ending June 2025, in accordance with Circana.
“This poses a significant challenge for restaurants, as home-cooked meals directly substitute demand for dining establishments, translating to reduced revenues and declines in customer traffic,” mentioned Coresight Analysis analyst Sujeet Naik.
Due largely to softer gross sales and visitors ranges, the Nationwide Restaurant Affiliation’s Restaurant Efficiency Index (RPI) fell 0.8% in December 2025 in comparison with the earlier month, the bottom studying since March.
“If you combine restaurant margins being under pressure with a tenuous financial situation, all you need is one or two things to go wrong,” mentioned Financial institution of America Eating places Senior Analyst Sara Senatore to Time Journal.
Associated: Chili’s launches a reduction drink program
