The all-you-can-eat deal that seafood lovers dreamt of has become a nightmare for the American restaurant chain Red Lobster. The company, a fixture in the casual dining scene, has been forced to file for Chapter 11 bankruptcy protection in the US, and a disastrously popular shrimp promotion is squarely to blame.
What was meant to be a limited-time offer spiralled out of control. The 'Endless Shrimp' deal, initially priced at a modest sum, was made a permanent £16 menu item by former CEO Paul Kenny. The decision proved catastrophic as customers flocked to the restaurants, consuming shrimp at an unsustainable rate and plunging the chain into over £10 million in losses in just one quarter.
A Recipe for Disaster
The financial turmoil triggered a seismic shift in ownership. Thai Union Group, a major seafood supplier and then-owner of Red Lobster, grew exasperated with the mounting losses. They have now completely severed ties with the restaurant group, offloading their stake and exiting the business entirely.
This isn't the first time Red Lobster's signature promotion has caused trouble. The offer was previously linked to a devastating £3.3 million loss back in 2020, a warning sign that went unheeded.
What's Next for the Seafood Giant?
The bankruptcy filing is designed as a strategic move for survival, not a closure notice. Red Lobster has announced a 'stalking horse' agreement, meaning it intends to sell its business to an entity formed by its existing lenders. The primary goal is to keep hundreds of restaurants open, preserve tens of thousands of jobs, and ensure a smooth restructuring process.
The company is also taking legal action against its former suppliers and landlords, alleging they charged inflated prices and rents, further squeezing its finances during this critical period.
For now, UK fans of the chain need not worry about their next cheddar bay biscuit fix. Red Lobster has assured that all its restaurants will remain open throughout the bankruptcy process, and it will continue to honour gift cards and loyalty programmes.
