Red Lobster initiates an internal probe into its renowned “endless shrimp” promotion. The seafood giant, which recently sought Chapter 11 bankruptcy protection in Florida, is turning the spotlight on Thai Union, its majority owner, to assess its role in the financial downturn.

Promotion Gone Awry

Initially introduced as a temporary indulgence priced at USD 20, the “endless shrimp” offer morphed into a permanent fixture on Red Lobster’s menu under former CEO Paul Kenny’s directive in May 2023. Despite facing resistance from within the management ranks, Kenny’s decision left an indelible mark, triggering unforeseen consequences.

Red Lobster’s move to ax contracts with two breaded shrimp suppliers thrust Thai Union into the exclusive role of supplier. Concurrently, this transition coincided with escalated costs, a fact highlighted by current CEO Jonathan Tibus in legal filings. Tibus underscored Thai Union’s overbearing influence on shrimp procurement decisions, now under scrutiny.

Silence from Thai Union

Despite mounting concerns, Thai Union has maintained silence on the unfolding debacle, leaving stakeholders pondering its stance and potential implications.

Burdened by a staggering USD 294 million debt load, Red Lobster charts a path towards solvency by shuttering underperforming outlets and orchestrating a sell-off to a consortium of lenders, led by Fortress Investment Group.

Industry Impact

Red Lobster’s financial woes reverberate across the seafood landscape, as the Orlando-based behemoth commands a substantial market share. Its predicament is felt keenly in the industry, given its significant contributions to North American lobster tail purchases and global rock lobster sales.

Attributing its financial quagmire to a blend of mismanagement, inflationary pressures, soaring rental costs, and heightened competition, Red Lobster grapples with a USD 76 million net loss in 2023. In a bid to weather the storm, the company embarks on a series of strategic measures, including the closure of 93 outlets, to mitigate losses and pave the way for a resurgence.