ORLANDO, Florida — Red Lobster, the well-known seafood restaurant chain, has filed for Chapter 11 bankruptcy protection, citing financial difficulties exacerbated by the collapse of its popular “endless shrimp” promotion. Originally introduced as a limited-time offer, the promotion incurred substantial losses when it was extended indefinitely, allegedly due to mismanagement by its majority owner, Thai Union.
Court documents reveal that Red Lobster contends Thai Union, which also serves as its principal shrimp supplier, pushed for the “endless shrimp” deal to become a permanent fixture despite internal objections. This decision led to significant financial setbacks in 2023.
Struggling with mounting debt and underperforming outlets, Red Lobster has announced plans to close certain locations and transfer the remaining assets to a consortium of lenders, including Fortress Investment Group.
The restaurant chain, with approximately 550 establishments nationwide, has grappled with financial challenges for some time. In 2023 alone, Red Lobster reported a staggering net loss of $76 million and had previously shuttered 93 restaurants as part of cost-cutting measures.
The once-profitable “endless shrimp” promotion, known for its all-you-can-eat offering, initially enjoyed success but ultimately became unsustainable. Red Lobster attributes its financial woes to Thai Union’s insistence on making the promotion a permanent fixture.