How Red Lobster’s misguided endless shrimp promotion drove it into Bankruptcy

How Red Lobster’s misguided endless shrimp promotion drove it into Bankruptcy

NY (CNN)— A $20 unlimited shrimp menu was added by Red Lobster last summer. Twenty years of Red Lobster's Endless Shrimp limited-time promotion were successful.

Thai Union, a Bangkok-based canned seafood firm and Red Lobster's latest big stakeholder, viewed the offer as an opportunity to sell off its massive shrimp catch and make it a daily staple. Thai Union became Red Lobster's largest investor in 2020.

The switch cost Red Lobster $11 million.

The bankruptcy petition by Red Lobster on Sunday provides insight on Thai Union's participation in the unending shrimp debacle. Red Lobster management rejected that promotion, thus it is investigating.

The lawsuit alleged Red Lobster terminated two breaded shrimp suppliers under a Thai Union-appointed CEO, giving Thai Union an exclusive arrangement to provide shrimp.

According to the chain's lawsuit, that increased expenses and violated the company's usual supplier selection procedure based on predicted demand.

“This decision created operational and financial issues for [Red Lobster], burdening the company with Thai Union supply obligations,” the company stated in the lawsuit.

Thai Union did not reply to CNN's request for comment.

Endless shrimp didn't kill Red Lobster. Former executives and restaurant observers believe handoffs between investors and corporate parents and Thai Union's mismanagement sank the American seafood poster child.

In its bankruptcy declaration, Red Lobster alleged “certain operational decisions by former management have harmed [Red Lobster] financial situation in recent years.”

Over the past two decades, fast-casual shops like Chipotle and quick-service companies like Chick-fil-A have grown rapidly, squeezing Red Lobster.

Red Lobster struggled to attract Millennials to its Baby Boomer client base due to years of underinvestment in marketing, food quality, service, and location renovations.

Casual eating began with Red Lobster. They were powerful and changed how Americans ate fish, said Cornell University food and beverage management expert Alex Susskind in a CNN interview.

Susskind claimed the firm didn't expand on that. Red Lobster was huge with Baby Boomers. They didn't recruit younger people."

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