Red Lobster Investigates Decline in ‘Endless Shrimp’ Sales Following Bankruptcy Declaration
Red Lobster, having filed for Chapter 11 bankruptcy in Florida on Sunday evening, is delving into the involvement of its majority owner Thai Union in the “endless shrimp” campaign, which resulted in $11 million in losses, as revealed in court documents.
According to the filings, Red Lobster attributes the debacle to a series of missteps by the global seafood conglomerate, which holds the majority of its equity and supplies shrimp to its establishments.
The restaurant chain, boasting approximately 550 casual dining outlets across the United States, initially introduced a $20 endless shrimp offering as a temporary promotion. However, former CEO Paul Kenny opted to make it a permanent fixture starting in May 2023, despite facing significant opposition from other members of the management team.
In the aftermath, several Red Lobster locations experienced substantial shrimp shortages. Simultaneously, the chain terminated contracts with two breaded shrimp suppliers, granting Thai Union an exclusive agreement that resulted in escalated costs, as outlined by current CEO Jonathan Tibus in the court filing.
Thai Union was unavailable for immediate comment on Monday.
Red Lobster, burdened with $294 million in debt, intends to shutter some underperforming establishments and offload the remainder to a consortium of its creditors, including Fortress Investment Group.
Headquartered in Orlando, Florida, Red Lobster stands as one of the globe’s largest seafood restaurant chains, operating 54 locations beyond the borders of the United States and boasting approximately 36,000 employees. The company accounts for 20% of all North American lobster tail purchases and 16% of global rock lobster sales, according to the documents.
Red Lobster cited a slew of challenges for its ailing business, including poor managerial choices, surging inflation, untenable rent expenses, and heightened competition. In 2023, it recorded a net loss of $76 million and recently made the decision to close 93 outlets in a bid to mitigate costs.
