Red Lobster, the renowned seafood chain, has shockingly and abruptly closed 100 of its restaurants across multiple states.
The news, delivered without warning, left many, including the employees who arrived at work on Monday, in a state of disbelief, finding the doors closed and the business in bankruptcy.
Last summer, Red Lobster introduced a seemingly enticing promotion-$20 for unlimited all-you-can-eat shrimp. However, this move proved to be a financial disaster, with the company’s largest shareholder, Thai Union, having to write off a staggering $530 million loss by the year’s end.
On January 18, 1968, entrepreneurs Bill Darden and Charley Woodsby opened their first Red Lobster restaurant in Lakeland, Florida. Four other restaurants followed the first opening. At its peak, the chain had 719 locations worldwide.
Jim Crow laws were the order of the day when Bill Darden opened his first Red Lobster restaurant. Bill Darden ignored the laws of the segregationists and seated Black people in his restaurant.
The Shrimp Rots From The Head Down
One could argue that Red Lobster was ‘eaten out of business’ by customers who took advantage of the all-you-can-eat promotional deal. Customers would come to the restaurant and order the all-you-can-eat plate. Some would stay for long periods to eat more than they could. The customers’ over-eating and upper management’s incompetence played a significant role in closing the restaurants.
Some company management team members are pointing fingers at Thai Union, the Thailand-based seafood company with a 49% stake in Red Lobster. According to CEO Jonathan Tibus, there is an ongoing investigation into the Thai Union’s influence over the shrimp deal.
Tibus also points a finger at his predecessor, former Red Lobster CEO Paul Kenny. In May 2023, Kenny implemented “the $20 unlimited shrimp promotion as a permanent menu item.”
Restructuring For Survival
Employees knowledgeable about the company’s inner workings blame Lobster’s penny-pinching ways for its failure.
Employees also blamed Thai Union’s penny-pinching for the company’s downfall.
A CNN report says a former Red Lobster executive said the company “forced huge cost reductions, including many that were pennywise and pound-foolish because they hurt sales.” According to its bankruptcy filing, Red Lobster owes over $16.7 million in unpaid wages to 36,000 employees.
“The company secured $100 million in financing commitments from its existing lenders but has liabilities of more than $1 billion,” the filing said.
Red Lobster has an annual customer base of over 64 million. Now, that’s a lot of shrimp to capture. Precious did not eat all those shrimp by herself. “From now on, you order takeout. No more buffets for you.”
Clinton Franklin is a formally trained Computer Scientist and a writer at heart. Clinton is an avid observer of nature and a lover of people and diverse cultures. He adheres to the adage, “Think globally, but act locally.”
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