Red Lobster’s disastrous ‘Endless Shrimp’ deal was – Business News
The $20 “Endless Shrimp” deal that in the end despatched Red Lobster out of business wasn’t simply a failed experiment – however a scheme by its house owners to squeeze the company, in line with a new lawsuit.
Leading up to its 2024 chapter submitting, Thai Union – a main seafood producer and then-owner of Red Lobster – was attempting to “squeeze out every drop of value” from the long-lasting restaurant chain, in line with a swimsuit filed final month within the Ninth Judicial Circuit Court in Florida.
“Thai Union treated the Company as little more than a distribution arm for its own products, milking whatever value it could from Red Lobster, especially as the Company became insolvent,” the swimsuit stated.
A new lawsuit accuses Thai Union of implementing the “Endless Shrimp” deal as a scheme to squeeze income. Red Lobster
It was filed by a trust on behalf of Red Lobster collectors, who say they had been owed about $295 million when the chain filed for chapter – and are actually demanding a jury trial to find out financial damages.
Red Lobster and Thai Union didn’t instantly reply to The Post’s requests for remark.
Bloomberg earlier reported on the lawsuit.
Thai Union turned Red Lobster’s all-you-can-eat deal from a limited-time offering into a everlasting menu fixture, although it “made no economic sense” – and successfully remodeled “a successful legacy Red Lobster strategy” into “a car crash,” the swimsuit stated.
Red Lobster misplaced a whopping $11 million in a single quarter from the disastrous deal.
But it was an train in “self-dealing and exploitation,” because the enhance in demand from the deal compelled Red Lobster to buy up copious quantities of shrimp from Thai Union at inflated costs – whilst average spend per diner declined, in line with the criticism.
In 2016, Thai Union – a Bangkok-based seafood giant recognized for manufacturers like Chicken of the Sea and Genova – purchased a minority stake in Red Lobster. Four years later, it obtained majority control of the American chain.
As Red Lobster was struggling to remain afloat amid pandemic-era store closures and stiff competitors, Thai Union despatched a number of representatives to Red Lobster’s headquarters in Orlando, Fla. – the place they allegedly made it clear who was in charge, in line with the lawsuit.
Red Lobster misplaced $11 million in a single quarter from the everlasting “Endless Shrimp” deal. jetcityimage – stock.adobe.com
Immediately upon his arrival, Paul Kenny, a Thai Union shareholder, “made clear that he – not [CEO Kelli] Valade – was in charge. Within weeks, Valade resigned after serving only seven months as CEO,” the swimsuit stated.
In August 2022, Kenny was named the chain’s interim CEO, and Thai Union quickly “took control of shrimp purchasing in part by embedding its own operatives in Red Lobster’s decision-making process,” the swimsuit stated.
Kenny allegedly began interfering with the method for awarding provider contracts, typically remarking that Red Lobster “owed it to Thai Union to purchase its products exclusively,” in line with the lawsuit.
In 2023, Kenny banned a longtime provider of pre-breaded shrimp for a 12 months – making Thai Union the chain’s sole supplier of practically half of its shrimp merchandise and enabling it to “charge Red Lobster significantly more … than the going market rate,” the swimsuit stated.
Red Lobster filed for chapter in 2024. Robert Miller for NY Post
Later that 12 months, Red Lobster defaulted on a loan from Fortress Investment Group, which then took control of its board.
In January 2024, Thai Union introduced that it might divest for the company. Red Lobster is now owned by an investment group led by Fortress.
Fortress didn’t instantly reply to The Post’s request for remark.
The American seafood chain is now within the midst of a turnaround effort being led by CEO Damola Adamolekun – the 37-year-old who was employed in August 2024 after serving to revive PF Chang’s.
In April, Red Lobster revived the “Endless Shrimp” deal – although this time, it’s back to a limited-time keep on the menu.
