Red Lobster Is Close to Bankruptcy Most Likely Because of ‘Endless Shrimp’

In a surprising turn of events, Red Lobster, which has been in business since 1968, is temporarily closing 87 of its locations across 27 states. The “Ultimate Endless Shrimp” deal seems to be to blame.

People are no strangers to promotional deals that restaurants advertise to entice customers to dine at their place, from the $1 margaritas at Applebee’s to the 4-for-$4 deal at Wendy’s. It’s a business model to get people to be encouraged to return to the restaurants, helping the establishments rake in the profits.

But it didn’t work well for Red Lobster. The company has been considering filing for Chapter 11 bankruptcy since last month, and will most likely do so next week.

The “Ultimate Endless Shrimp” deal was first introduced in 2023 and included two options of endless shrimp at $20 per person. Originally, it was a limited-time deal, like the McRib at McDonald’s, but with its popularity, the restaurant chain decided to make it a permanent fixture of its menu. However, due to its huge success, it led to a decline in profits at the same time. 

Despite the $11 million profit loss, the restaurant chain didn’t get rid of the deal, instead moving the price to $25. However, the adjustment didn’t make much difference, further contributing to Red Lobster’s $20 million profit loss last year.

Ludovic Regis Henri Garnier, CFO of Red Lobster’s parent company, Thai Union Group, commented on the disastrous deal in November 2023.

“We knew the price was cheap,” Restaurant Business Magazine says Garnier told investors. “We wanted to boost our traffic, and it didn’t work.”

People on X, formerly known as Twitter, share their thoughts on the situation.

“I would definitely watch a quirky Netflix comedy about an all-you-can-eat shrimp deal that leads to Red Lobster’s bankruptcy. Just putting that out there,” one user quipped.

“Red Lobster is literally going bankrupt because people took “all you can eat shrimp” too literally,” another user commented.