The Craziest Parts Of The Red Lobster Bankruptcy Story Revealed

May 23, 202418:36 UTC

Red Lobster, formerly the largest seafood restaurant chain in the world, officially filed for Chapter 11 bankruptcy protection on Monday. The chain, formerly owned by restaurant group Darden Restaurants Inc DRI, began auctioning off kitchen equipment at some locations, but does not plan to fully shut down operations, according to its CEO, Jonathan Tibus.

Here are some of the juiciest details regarding the seafood chain's demise:

The Endless Shrimp PromotionRed Lobster famously offered its “Endless Shrimp” promotion, where customers could pay around $20 to eat as much shrimp as they wanted. Customers could order various shrimp dishes, including shrimp scampi and popcorn shrimp.

At one point, the promotion was only offered for a limited amount of time, usually around a month. But, to increase traffic, Red Lobster began offering the “Endless Shrimp” promotion all the time, leading to millions of dollars in losses. Author and podcast host Trung Phan said on X that one of Red Lobster's owners (and suppliers) Thai Union, may have been using the endless shrimp promotion to offload its supply of shrimp.

Leadership ChangesIt's not uncommon for struggling businesses to cycle through C-suite executives. Lululemon Athletica Inc LULU recently announced a leadership shake-up amid slowing growth. But, Red Lobster seemed to struggle significantly with finding and retaining talent to lead its operations, cycling through five CEOs in five years, in a sign that things were getting a little fishy.

Thai Union's Motives As previously mentioned, Thai Union, a large producer of seafood products took a 49% stake in Red Lobster a few years ago. After that, Thai Union became Red Lobster's sole provider of shrimp, and some allege that the seafood producer took advantage of its relationship with Red Lobster, overcharging the restaurant chain for its products and skimping (not shrimping) out on quality control.

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