Endless shrimp was a successful annual limited-time offer for Red Lobster for 20 years. The new major shareholder in Red Lobster is Thai Union, a canned seafood company based in Bangkok. Thai Union saw the promotion as a way to get rid of the huge amounts of shrimp it was catching and made it an everyday item. (Thai Union became Red Lobster’s largest investor in 2020. ).
Sunday, Red Lobster filed for bankruptcy. This brings to light Thai Union’s part in the never-ending shrimp mess. Red Lobster said it is investigating the circumstances of that promotion, which Red Lobster management opposed.
The filing said that Thai Union chose the CEO of Red Lobster and got rid of two of its breaded shrimp suppliers. This gave Thai Union exclusive rights to supply shrimp to the chain.
That caused prices to go up, and it wasn’t in line with how the company usually chooses suppliers based on expected demand, the chain said in its filing.
Red Lobster said in the filing that Thai Union’s decision caused operational and financial problems for the company and put heavy supply obligations on it.
Endless shrimp alone didn’t doom Red Lobster. Analysts and former leaders of the chain say that the American seafood icon was brought down by a number of things, such as bad management by Thai Union and handoffs between investors and corporate parents.
“Some operational decisions made by former management have hurt [Red Lobster’s] finances in recent years,” the company said in its bankruptcy filing.
Over the past 20 years, fast-casual chains like Chipotle and quick-service chains like Chick-fil-A have grown very quickly and become very popular. This has put pressure on Red Lobster. Red Lobster has had trouble adding Millennials to its core Baby Boomer customer base for years because it hasn’t spent enough on marketing, food quality, service, and restaurant upgrades.
“Red Lobster was the foundation of casual dining. In a previous interview with CNN, Alex Susskind, a professor of food and beverage management at Cornell University, said, “They were powerful and well-known, and they changed the way Americans eat seafood.”
But the company didn’t build on that foundation, Susskind said. “Red Lobster had incredible popularity among Baby Boomers. They didn’t bring in a newer generation. ”.
Red Lobster’s beloved Endless Shrimp promotion allowed customers to indulge in unlimited shrimp dishes for a fixed price. This tempting offer ultimately contributed to the downfall of the struggling seafood chain. With Red Lobster filing for bankruptcy and closing nearly 100 locations, the future of Endless Shrimp hangs in the balance.
In this article, we’ll explore the history of Endless Shrimp, analyze why it failed, and look ahead at what the end of this iconic promotion means for Red Lobster.
A Brief History of Endless Shrimp
Red Lobster first rolled out Endless Shrimp in the early 2010s as a limited-time offer to boost sales during slow seasons Customers could order unlimited shrimp scampi, fried shrimp, or grilled shrimp for around $15
The promotion always drew big crowds with Red Lobster reporting sales increases of 5-6% during Endless Shrimp. In 2020 Red Lobster made Endless Shrimp permanent on their menu. For $19.99, shrimp lovers could binge year-round.
Endless Shrimp became a cultural phenomenon, referenced across pop culture and social media. Customers took on the challenge of eating astronomical amounts of shrimp, with one customer reportedly consuming over 30 orders!
The Downfall of Endless Shrimp
At first, Endless Shrimp succeeded at getting customers in the door and was profitable for Red Lobster. However, a few factors led to its downfall:
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Food costs – Supply chain issues caused shrimp prices to rise, cutting into profits from the cheap $19.99 price point.
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Lower customer spend – People fill up on shrimp, meaning less appetizer and drink sales. The average per person check for Endless Shrimp was $20, much lower than normal.
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Labor costs – Servers had to constantly attend to Endless Shrimp tables, losing out on tips and turning over fewer tables.
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Time costs – Campers stayed for hours eating shrimp, limiting table turnover. One customer stayed over 4 hours and consumed 30 shrimp orders!
Red Lobster reported an $11 million loss in 2023 attributed largely to Endless Shrimp. The costly promotion became unsustainable.
The End of Endless Shrimp
In May 2024, after a sharp sales decline, Red Lobster announced it would file for bankruptcy and close nearly 100 locations. While over 500 Red Lobsters remain open for now, the future is uncertain.
Will Endless Shrimp return? Industry experts are skeptical. Red Lobster’s new owners may drop it or modify it heavily when they take over after bankruptcy proceedings. They’ll likely avoid promotions that lose money.
Some analysts think Endless Shrimp could come back in a limited capacity at higher prices or with order minimums. Others say it’s gone for good.
What’s Next For Red Lobster?
As Red Lobster plots its path forward, here are some options analysts foresee:
- Focus on core menu, cut discounts
- Emphasize takeout and delivery
- Refresh restaurants with a more modern vibe
- Expand alcohol sales and new drink menus
- Reduce operating costs and overhead
The chain needs to rebuild value and trust. But bargains like Endless Shrimp that undercut profits are unlikely to return.
Red Lobster needs to give customers reasons besides cheap shrimp to return, through high-quality food, service, and ambiance. Nostalgia will only carry them so far.
While Endless Shrimp is a promotional marvel, its overly generous nature was part of Red Lobster’s financial undoing. As the saying goes, all good things must come to an end. For Endless Shrimp fans, those endless platters of succulent shrimp are now just a memory.
Owned by General Mills
In 1968, the first Red Lobster opened in Lakeland, Florida, about an hour south of Orlando. At that time, casual dining was just getting started.
The brand was started by southern restaurateurs Bill Darden and Charley Woodsby. Darden owned several Howard Johnson’s restaurants, one of the first casual dining concepts.
“Our motto was informal and family prices,” Woodsby later said. They saw an opportunity to bring seafood to landlocked people at more affordable prices than fine-dining restaurants.
“In most of middle America, you couldn’t get decent seafood. “Red Lobster made it popular for everyone,” said Jonathan Maze, editor-in-chief of the trade magazine Restaurant Business. “Red Lobster was part of this casual dining revolution. ”.
Just two years into Darden and Woodsby’s venture, General Mills acquired the brand. General Mills owned brands like Betty Crocker, Wheaties, and Cheerios. The company also wanted to get into the restaurant business with Red Lobster’s five simple restaurants.
By the early 1970s, with General Mills’ advertising muscle behind it, Red Lobster opened restaurants across the South.
Red Lobster rose quickly and was the first casual dining chain to advertise on network television, according to a Harvard Business School study. Red Lobster also developed the first national seafood distribution system in the 1970s.
“Many diners preferred their seafood fried in those days, and Red Lobster’s hush puppies could be considered an early ‘signature item,’” Joe Lee, the first general manager at Red Lobster and later its president, said in a journal article. “Families were welcomed with high chairs and a 59-cent child’s plate.”
By 1978, Red Lobster had 236 restaurants and $291 million in sales. It had 372 restaurants and $834 million in sales in 1985.
In 1995, General Mills split off its restaurant business into a new company called Darden Restaurants, which was named after Bill Darden, the founder of Red Lobster. At first, the company had the well-known chain Red Lobster and the new chain Olive Garden, which General Mills started in 1982.
But Red Lobster fell behind its sister brand Olive Garden under Darden.
By 2008, Olive Garden’s sales had eclipsed Red Lobster’s. Darden also acquired fast-growing chains such as Longhorn Steakhouse, Capital Grille and Yard House.
“Darden stopped investing in Red Lobster. “Things slowly got worse,” Les Foreman told CNN. From 2002 to 2022, he was director of operations and divisional vice president at Red Lobster. Red Lobster’s sales began declining and Darden prioritized investments in its other brands.
Darden soon faced pressure from activist investors pushing the company to split in two.
Darden responded to activist pressure by announcing plans in 2013 to sell Red Lobster, separating the chain from the rest of its business.
The following year, Darden sold Red Lobster to Golden Gate Capital, a private equity firm, for $2.1 billion. To help fund the deal, Red Lobster spun off its real estate assets in a transaction known as a sale leaseback agreement. Red Lobster had long owned its own real estate but would now be paying rent to lease its restaurants.
In the restaurant business, sale leasebacks are very common. However, Red Lobster ended up losing money because it was stuck with leases it couldn’t pay.
“That produced cost pressures on Red Lobster that they’ve never had before,” said analyst John Gordon. “It became a problem. ”.
While this was going on, fast-casual and quick-service restaurants grew thanks to lower prices, thousands of new drive-thru restaurants, and online delivery. These chains pressured the casual dining sector.
According to Technomic, a restaurant research firm, casual dining has gone down from making up 33.6 percent of all restaurant sales in 2013 to 31.1 percent in 202023.
Red Lobster’s controlling shareholder Thai Union also hurt the brand, say former employees and analysts.
Thai Union was a top supplier of shrimp to Red Lobster for more than 20 years. In 2016, Thai Union took a $575 million minority stake in the brand. In 2020, Thai Union deepened its financial interest in Red Lobster.
Thai Union saw an opportunity to grow its business and also become a bigger supplier to Red Lobster.
To save money on labor, it also tried pushing Red Lobster’s waitstaff to the limit by going from having waiters cover three tables to having 10 waiters cover 10 tables.
A lot of Red Lobster executives left when Thai Union took over, which caused a lot of turnover in the C-suite. Red Lobster hired a new CEO, CMO, CFO, and CIO in 2021 and 2022. All left the company within two years.
Then came the all-you-can-eat shrimp mishap last year.
Thai Union CEO Thiraphong Chansiri said in November, “We were expecting an increase of 2020% in customer traffic, but the actual number was up to 2040%.”
Two months later, Thai Union said it was pulling its money out of Red Lobster, which cost it $530 million. As well as “sustained industry headwinds, higher interest rates and rising material and labor costs,” the company said the pandemic was to blame. ”.
“I’m going to stop eating lobster,” Chansiri said this year. Ad Feedback Ad Feedback
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Fear & Greed Index
Last summer, Red Lobster made $20 endless shrimp a permanent menu item.
Endless shrimp was a successful annual limited-time offer for Red Lobster for 20 years. The new major shareholder in Red Lobster is Thai Union, a canned seafood company based in Bangkok. Thai Union saw the promotion as a way to get rid of the huge amounts of shrimp it was catching and made it an everyday item. (Thai Union became Red Lobster’s largest investor in 2020. ).
The change cost Red Lobster $11 million.
Sunday, Red Lobster filed for bankruptcy. This brings to light Thai Union’s part in the never-ending shrimp mess. Red Lobster said it is investigating the circumstances of that promotion, which Red Lobster management opposed.
The filing said that Thai Union chose the CEO of Red Lobster and got rid of two of its breaded shrimp suppliers. This gave Thai Union exclusive rights to supply shrimp to the chain.
That caused prices to go up, and it wasn’t in line with how the company usually chooses suppliers based on expected demand, the chain said in its filing.
Red Lobster said in the filing that Thai Union’s decision caused operational and financial problems for the company and put heavy supply obligations on it.
Thai Union did not immediately respond to CNN’s request for comment.
Endless shrimp alone didn’t doom Red Lobster. Analysts and former leaders of the chain say that the American seafood icon was brought down by a number of things, such as bad management by Thai Union and handoffs between investors and corporate parents.
“Some operational decisions made by former management have hurt [Red Lobster’s] finances in recent years,” the company said in its bankruptcy filing.
Over the past 20 years, fast-casual chains like Chipotle and quick-service chains like Chick-fil-A have grown very quickly and become very popular. This has put pressure on Red Lobster. Red Lobster has had trouble adding Millennials to its core Baby Boomer customer base for years because it hasn’t spent enough on marketing, food quality, service, and restaurant upgrades.
“Red Lobster was the foundation of casual dining. In a previous interview with CNN, Alex Susskind, a professor of food and beverage management at Cornell University, said, “They were powerful and well-known, and they changed the way Americans eat seafood.”
But the company didn’t build on that foundation, Susskind said. “Red Lobster had incredible popularity among Baby Boomers. They didn’t bring in a newer generation. ”.
Red Lobster Is Hemorrhaging Millions Because of Endless Shrimp | WSJ What Went Wrong
FAQ
Who owns Red Lobster in 2024?
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Company type
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Subsidiary
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Revenue
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US$2.6 billion (2018)
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Owner
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Golden Gate Capital (2014–2020)
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Number of employees
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55,000
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Parent
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Darden Restaurants (1995–2014) Thai Union Group (2020–2024)
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