Red Lobster CEO Damola Adamolekun has announced a strategic plan to review restaurant leases and close underperforming locations as the seafood chain works to recover from bankruptcy and revitalise its brand. The company emerged from Chapter 11 bankruptcy in September 2024 after being acquired and receiving approximately $70 million (£55 million) in new investments, marking a critical turning point in its financial restructuring.
CEO's Strategy for Recovery
Since taking over as CEO in September 2024, Adamolekun has implemented a series of initiatives aimed at boosting the chain's performance. These include comprehensive menu overhauls, the introduction of a happy hour to attract more customers, and a refreshed marketing strategy designed to reposition Red Lobster in the competitive restaurant market. The goal is to address the 'damaged brand' perception and drive long-term growth.
Financial Challenges and Lease Burdens
A significant obstacle in Red Lobster's recovery stems from sale-leaseback agreements made in 2014. These deals have left the chain with expensive leases for many underperforming locations, creating a financial strain that complicates efforts to streamline operations. Adamolekun is now actively reviewing these leases to identify sites that are no longer viable, with more closures expected as part of the cost-cutting measures.
Positive Signs Amidst Struggles
Despite these challenges, Red Lobster has reported encouraging performance metrics. In July, the chain saw a 10% increase in sales and an 18% rise in customer visits. This uptick is partly attributed to the popularity of viral seafood boils, which have helped attract new diners and generate buzz. However, Adamolekun acknowledges that the road to full recovery will require further closures and operational adjustments to ensure sustainability.
The CEO's admission that more closures are necessary underscores the ongoing efforts to stabilise the business. By focusing on underperforming stores and leveraging new investments, Red Lobster aims to rebuild its brand and secure a stronger market position in the coming years.
