Red Lobster filed for Chapter 11 bankruptcy and closed several locations in Florida. This was caused by a lot of debt, a changing of CEOs, a controversy over all-you-can-eat shrimp, and fewer customers overall.
Red Lobster has had a lot of problems, including a 30% drop in guests since 2019. These problems are described in bankruptcy papers filed in the Middle District of Florida. USA TODAY got a 124-page document on Tuesday from Red Lobster CEO Jonathan Tibus that explains why the chain of seafood restaurants filed for bankruptcy on Sunday and why he agrees with the decision.
The debtors have recently had to deal with a lot of financial and operational problems, such as a tough macroeconomic environment, a large number of restaurants that aren’t doing well, failed or bad strategic initiatives, and more competition in the restaurant industry, Tibus wrote in the bankruptcy document.
When Tibus was retained as Red Lobsters chief revenue officer on Jan. 11, before he was named CEO, he said, “It was immediately clear that Red Lobster’s performance was deteriorating and had been so for several years,” the filing says.
Tibus said that Red Lobster’s annual guest count has dropped by about 30% since 2019 and has only slightly improved from pandemic levels seen in 2020 and 2021. Even though Red Lobster’s net sales went up by about 25% from 202021% to 202023%, which is a small recovery after the COVID-19 pandemic, net sales have been steadily going down for the last twelve months. “.
Where to get cheddar bay biscuits: Red Lobsters fan favorite pastry is still available in stores
Red Lobster’s popular Endless Shrimp promotion has become a beloved annual tradition for seafood lovers across America For years, shrimp fans have impatiently counted down the days until the start of Endless Shrimp season, indulging to their heart’s content throughout the limited-time offering before sadly bidding farewell once it ended. But not this year – Red Lobster has announced an iconic first Endless Shrimp is now available year-round!
Endless Shrimp Gets A Permanent Spot on the Menu
In late June 2022, Red Lobster officially announced that their fan-favorite Endless Shrimp promotion would be sticking around permanently. No more guessing games or waiting for its brief return – guests can now get Endless Shrimp any day of the year at participating restaurants.
Red Lobster’s Chief Marketing Officer Patty Trevino explained the rationale behind this game-changing move in a press release
“Knowing how much our guests love and look forward to the return of Ultimate Endless ShrimpSM each year, we decided it’s time to make this guest favorite available all day, every day.”
For shrimp enthusiasts, this announcement was a dream come true. In the past, Endless Shrimp’s limited availability meant strategizing visits during its short window of availability and hurriedly getting your fill before it disappeared. But now cravings can be satisfied 365 days a year.
The Origins of Endless Shrimp
Endless Shrimp has been an iconic, beloved promotion at Red Lobster for over 18 years. Its premise is simple – for a fixed price ($20), guests can enjoy unlimited servings of delicious shrimp dishes like Walt’s Favorite Shrimp, Coconut Shrimp, and Garlic Shrimp Scampi. Paired with a side and Cheddar Bay Biscuits, it’s an indulgent feast.
The promotion first kicked off in the early 2000s and was an instant success, drawing in hordes of shrimp devotees. Over nearly two decades, it evolved from a limited-time offer into an annual summer tradition eagerly anticipated by Red Lobster’s loyal customers.
But over the past couple years, Red Lobster has experienced declining sales and a 30% drop in guests since 2019. Endless Shrimp’s new year-round status seems strategically aimed at driving traffic and reigniting interest during slow periods.
Why Red Lobster Is Making Big Changes
Red Lobster’s decision to make Endless Shrimp permanent didn’t happen in a vacuum – it comes on the heels of some serious struggles for the chain.
In May 2023, Red Lobster filed for Chapter 11 bankruptcy, citing unsustainable debt obligations, high lease costs, and operational missteps under previous leadership. The filing specifically called out a controversial 2021 “Endless Shrimp” decision as an example of management bungling.
That year, Red Lobster launched the first-ever Unlimited Endless Shrimp menu addition despite concerns from other leaders. This $20 unlimited shrimp offer led to $11 million in losses and supply issues, burdening Red Lobster with costly shrimp commitments. The executive behind this debacle was terminated shortly after.
Red Lobster’s new CEO Jonathan Tibus took over in early 2022 with a mandate to turn things around. Making Endless Shrimp permanent seems to be part of his strategy to boost sales by giving customers what they love most. Even amid bankruptcy proceedings, Red Lobster is banking on shrimp power to help them restructure and recover.
Endless Possibilities: Mixing and Matching Shrimp Favorites
While Endless Shrimp was previously a summer-only affair, its new year-round status offers greater variety. Red Lobster’s menu rotates seasonally, so shrimp fans can look forward to trying festive new preparations.
Currently, the Endless Shrimp lineup includes:
- Garlic Shrimp Scampi – garlicky oven-broiled shrimp
- Coconut Shrimp – shrimp coated in flaky coconut, fried
- Shrimp Linguini Alfredo – shrimp & linguini in creamy Alfredo
- Walt’s Favorite Shrimp – fried butterfly shrimp with cocktail sauce
- Garlic Grilled Shrimp Skewer – shrimp skewer with garlic butter glaze
Guests choose two shrimp dishes to start, ordering additional selections when ready. It’s a customizable indulgence – crustacean connoisseurs can sample the full range of flavors and cooking methods.
Red Lobster will likely showcase holiday flavors in Endless Shrimp as 2023 progresses. Keep an eye out for seasonal additions like Peppermint Shrimp or Eggnog Shrimp this winter. When you can get it any time of year, why not get festive with it?
Get Your Shrimp On Any Day of the Week
Bidding farewell to Endless Shrimp season is a thing of the past. Red Lobster’s iconic promotion now has a permanent place on menus at participating restaurants. No matter what month it is or what the occasion may be, indulging your shrimp craze is just a visit away.
While Red Lobster works to get its finances in order, one thing is certain: they know their loyal customers love shrimp. Endless Shrimp’s new year-round availability offers a tasty guilty pleasure you can enjoy anytime. So gather your fellow crustacean devotees and get ready to embark on a never-ending shrimp feast!
Unlimited endless shrimp menu addition being investigated
According to the bankruptcy filing, Tibus talks about a big case of bad management that happened when Paul Kenny, the former CEO of Red Lobster, made unlimited endless shrimp a permanent $20 item on the menu “despite significant pushback from other members of the companys management team.”
Kenny’s choice about the endless shrimp cost Red Lobster $11 million and put the company “under heavy supply obligations,” especially with its investor, Thai Union, Tibus said in the bankruptcy filing.
Tibus says that Red Lobster is looking into what led to Kenny’s decision, including whether he and Thai Union were responsible for supply problems that led to major shrimp shortages. Restaurants went days or weeks without certain types of shrimp, he added.
Tibus said in the bankruptcy document that Thai Union was also heavily promoted in Red Lobster stores, which Kenny pushed for. The document also said that Kenny got rid of two of Red Lobster’s breaded shrimp suppliers, leaving Thai Union with an exclusive deal that made prices go up for the seafood restaurant chain.
USA TODAY couldn’t find Kenny’s contact information, and Red Lobster didn’t answer an email asking for it.
Red Lobster’s liquidity declined rapidly
Red Lobster suffered a $76 million net loss during fiscal year 2023, according to Tibus. The CEO said in the document that Red Lobster’s cash flow quickly dropped because of losses, including $31 million from June to September 2023.
Red Lobster thought it would make “a significant amount of cash” by December to make up for its losses, but things did not get better.
It was clear by the end of 2023 that the company’s cash flow problems would not be fixed by the seasonal rise in sales, Tibus said.
According to Tibus, Red Lobsters business continued to take a hit for the following reasons:
As a result of inflation, restaurant menu prices are going up, which makes people less likely to consider eating out.
◾ A “material portion” of the leases for Red Lobsters 687 locations being priced above market rates. The company spent $190. 5 million in lease obligations, over $64 million of which paid for underperforming stores.
◾ Operational decisions by former management harming the companys financial situation in recent years.
Will America lose Red Lobster? Changing times bring sea change to menu, history, outlook
Red Lobster Is Hemorrhaging Millions Because of Endless Shrimp | WSJ What Went Wrong
FAQ
Who owns Red Lobster in 2024?
|
Company type
|
Subsidiary
|
|
Revenue
|
US$2.6 billion (2018)
|
|
Owner
|
Golden Gate Capital (2014–2020)
|
|
Number of employees
|
55,000
|
|
Parent
|
Darden Restaurants (1995–2014) Thai Union Group (2020–2024)
|
How much is endless shrimp at Red Lobster?
Price, of course, is one of the most important considerations for most people when they’re dining out. Endless Shrimp is priced at $20, which is easily the best deal on Red Lobster’s menu. Take, for example, the two-entree combo platter, which comes with two sides.
Is Red Lobster ® ultimate endless shrimp SM coming back?
ORLANDO, Fla., June 26, 2023 /PRNewswire/ — Red Lobster ® is kicking off summer with an announcement that is sure to excite shrimp lovers everywhere – guest-favorite Ultimate Endless Shrimp℠ is here to stay! Gone are the days of anxiously awaiting the return of Ultimate Endless Shrimp℠.
What is the $20 ultimate endless shrimp deal?
The $20 Ultimate Endless Shrimp deal is a dine-in only offer that allows guests to enjoy unlimited servings of Walt’s Favorite Shrimp, Parrot Isle Jumbo Coconut Shrimp, Shrimp Skewers, Garlic Shrimp Scampi, and Shrimp Linguini. In addition, each order of Ultimate Endless Shrimp also comes with your choice of one regular side.
What is ultimate endless shrimp?
Ultimate Endless Shrimp is a fan-fave promotion that Red Lobster has typically brought back, year after year, for a select period of time. During it, the restaurant chain would offer a certain number of shrimp dishes — including some new ones — that folks were welcome to gorge themselves on for a set price.