Lobster in the Red

Look, there’s no way to sugarcoat this. There’s no way to bread and deep-fry it either. You ate too much shrimp. Like, a lot too much. In a much-anticipated move, Red Lobster has filed for bankruptcy. And yes, you played a (lobster) role in its troubles. Last summer, Red Lobster turned its limited-time offer of endless shrimp into a permanent menu item, a move that cost the company $11 million. That’s a lot of bread(ing). But wait. As is usually the case with big brand bankruptcies, there’s more to the story. It has to do with strong competition, management churn (Red Lobster has had five CEOs since 2021), and ownership directives. In this case, the trouble started when a company called Thai Union became Red Lobster’s largest shareholder. Thai Union also happens to be in the shrimp selling business. “Under a CEO appointed at the direction of Thai Union, Red Lobster eliminated two of its breaded shrimp suppliers, leaving Thai Union with an exclusive deal to provide shrimp for the chain.” Less than a decade after a mention in a Beyoncé song sent Red Lobster sales to the moon, new ownership drove them back to the bottom of the sea. How Red Lobster’s misguided endless shrimp promotion drove it into bankruptcy.

+ More from Bloomberg (Gift Article) on the situation Thai Union found itself in. “You have two relationships to the restaurant chain: You own the equity, and you also supply the shrimp. Not much you can do with the equity: There’s a lot of debt, the creditors rank ahead of you, and they are unlikely to let you take any cash out as a dividend. But, as the equity owner, you also control the board of directors and get to appoint the chief executive officer. The CEO decides how much shrimp to buy. What if he decided to buy a lot of shrimp?” The Endless Shrimp Investigation. When things go this poorly, blame is a lot like shrimp at a Red Lobster: there’s an endless supply. But don’t blame me for this one. When it comes to all you can eat, I’ve always been a Sizzler guy.