Red Lobster Thailand’s endless shrimp deal led to bankruptcy woes
Red Lobster’s Ultimate Endless Shrimp promotion, offering unlimited shrimp for US$20 (around 670 baht), became a permanent menu item last year, leading to a surge in customer traffic at the chain’s nearly 700 restaurants.
Diners flocked to Red Lobster, indulging in various shrimp dishes like Parrot Isle Jumbo Coconut Shrimp, Walt’s Favorite, Garlic Shrimp Scampi, Shrimp Linguini Alfredo, and Grilled Shrimp Skewers. The initial round of shrimp came with a choice of two sides, including coleslaw, french fries, mashed potatoes, baked potato, or rice.
The promotion sparked a frenzy, with TikTok users sharing videos of their shrimp-eating escapades. One user, mattpeterson__fan-764, took on the challenge of eating only at Red Lobster for an entire day.
However, the endless shrimp offering caused significant strain on Red Lobster employees. The promotion, previously a sporadic special, overwhelmed cooks and servers. Bargain hunters often complained about slow refills, and police were sometimes called to handle disputes over takeaway bags.
Red Lobster was already struggling, with a 30% drop in customer count since 2019. The chain, once a popular special-occasion venue, faced competition from cheaper rivals and waning interest from younger diners.
Thai Union Plc, the seafood giant based in Samut Sakhon acquired Red Lobster in 2020. The new management implemented cost-cutting measures and surprise inspections, further straining the staff. The introduction of the perpetual Endless Shrimp promotion added to the pressure.
Malcom Clarke, a former service manager at a Red Lobster in Orem, Utah, recalled corporate emails instructing staff to expedite shrimp orders.
“We’d already been squeezed to the bone.”
In January, Thai Union announced it was severing ties with Red Lobster due to mounting losses. CEO Thiraphong Chansiri cited “onerous financial obligations” and significant investments during adverse market conditions as reasons for the decision.
Red Lobster’s decline began long before the pandemic, with the chain experiencing a series of missteps and neglect from various corporate parents. The endless shrimp promotion was seen as a final blow.
Restaurant’s origins
The first Red Lobster opened in Lakeland, Florida, in 1968, aiming to bring affordable seafood to landlocked areas. General Mills acquired the chain in 1970, expanding it to 350 locations by 1983. However, rising costs and competition led to declining profits.
In 2014, Darden Restaurants sold Red Lobster to Golden Gate Capital for US$2.1 billion. Golden Gate’s subsequent sale-leaseback transaction, which generated US$1.5 billion, added a significant rent expense for Red Lobster managers.
Golden Gate eventually sold its stake to the Thai Union in 2020. The timing was unfortunate, as the pandemic severely impacted the restaurant industry. Red Lobster, already struggling, faced additional challenges due to its older customer base and limited takeout infrastructure.
Former employees described Paul Kenny, a liaison to Thai Union, as having a caustic management style. Red Lobster CEO Kelli Valade resigned in April 2022, eight months into her tenure, with Kenny taking over.
Kenny and Thiraphong’s visits to Red Lobster locations often left employees in tears due to harsh critiques. In 2022, just before the company’s General Manager Conference, six senior vice presidents and the chief operating officer were fired. The conference itself was marked by a scolding from Thiraphong, warning that the chain’s future was in jeopardy.
Desperate to boost sales, Red Lobster introduced new products like Cheddar Bay Shrimp, but they failed to gain traction. The decision to make Endless Shrimp a permanent menu item was seen by former employees as a last-ditch effort to drive sales.
In April of last year, Red Lobster cancelled contracts with two competing shrimp suppliers, leaving Thai Union with an exclusive deal. By September, Red Lobster had stopped paying many vendors, leading to its bankruptcy filing in May. The chain closed 140 restaurants, leaving 544 open, and reported a US$76 million net loss in 2023.
Fortress Investment Group recently acquired Red Lobster for US$375 million, a steep drop from its US$2.1 billion valuation a decade ago. Thiraphong expressed a desire to move on from the Red Lobster debacle.
“Red Lobster is done and over.”
In a statement, Thai Union emphasised that it had explored all avenues to resolve Red Lobster’s financial issues but ultimately had no choice but to cut ties, reported Bangkok Post.
