Red Lobster is feeling the pinch. For years, the seafood chain floundered due to labor issues, unstable management, and rising costs. Yet some say the sinker was a jumbo shrimp problem.
Red Lobster began in 1968 in Florida. The chain expanded rapidly in the 1980s and 1990s. It grew to more than 700 locations worldwide.
Also in the 1990s, “fast casual”—an eat-out option between fast food and casual dining with a server—burst onto the scene. (Think Chipotle, Boston Market, Panera . . .) Full-service restaurants like Red Lobster took a hit, even as baskets of Cheddar Bay Biscuits graced tables.
Steady management has also proven difficult for Red Lobster. The company weathered multiple ownership changes in its 56-year history.
Thai Union, one of the world’s largest seafood suppliers, became part owner of Red Lobster in 2016. The supplier now says it will stop investing in the chain. Building lease and labor costs piled up as well.
In spring 2024, the chain filed for bankruptcy protection. Bankruptcy can help people and businesses with serious debt start over and develop a plan forward. Usually, that involves selling assets (like equipment) to pay some debts. Laws try to mitigate the loss to lenders if the bankrupt person or organization can’t pay all it owes.
Bankruptcy could help Red Lobster withdraw from some long-term contracts and renegotiate leases, says Bloomberg News.
While the Bible doesn’t endorse defaulting on debts owed to others, Jesus does allow for new starts and new status with Him. He forgives those who trust in Him of all their debts against Him—because He willingly took the cost of sin Himself.
No one argues that many issues worked together to trap Red Lobster. But other troubles seem to fade compared to the woe of endless shrimp.
Last year, Red Lobster widened the net on its $20 all-you-can-eat shrimp deal—to all day, every day. But the company perhaps didn’t consider how much its crustacean-loving customers could nosh. Demand overwhelmed what the chain could afford and contributed to millions in losses. There were also major shrimp shortages—and shortages drive up costs.
Some industry analysts say mismanagement is also part of the Red Lobster tale. Apparently, some executives warned against the endless shrimp rollout. But the chain’s former CEO forged ahead.
Red Lobster has closed locations in more than 20 states. Those stores will sell possessions at auction.
Officials for TAGeX Brands call the Red Lobster sell off “the largest restaurant equipment auction event ever.” Everything from booths to ovens must go.
Lobster tank, anyone?
Why? Supply, demand, cost—these basic economic principles help explain the decisions people and businesses make. And they can sink companies that ignore them.
