Greed, Gluttony and the Crackup of Red Lobster

In June of last year, Red Lobster announced that Ultimate Endless Shrimp — as much as you can scarf down for just $20 — would become an “all day, every day” fixture of the menu.

Diners swarmed the chain’s nearly 700 restaurants, ordering round after round of Parrot Isle Jumbo Coconut Shrimp (breaded, sweet and fried), Walt’s Favorite (breaded and fried), Garlic Shrimp Scampi (shrimp in a pool of butter and garlic sauce), Shrimp Linguini Alfredo (shrimp on a pile of pasta with garlic sauce) and Grilled Shrimp Skewers (self-explanatory). The first round came with two sides: coleslaw, French fries, mashed potatoes, baked potato or rice.

It was a giddy, raucous display of gluttony. TikTokers sank into upholstered booths and declared their goals — “Hi, my name is Onalee and I’m going to eat 65 shrimp tonight” — or posted videos of shrimp-gobbling marathons. “Only eat at Red Lobster for an entire day?” said a grinning mattpeterson__fan-764. “Challenge accepted!”

Among employees, news that Endless Shrimp would, in fact, never end was greeted with dread. As an occasional special over the years, it was always a frantic ordeal. Cooks and servers could barely keep up. Bargain hunters griped about the pace of refills. Cops were summoned to handle diners enraged that they couldn’t get takeaway bags.

It was a struggle under the best of conditions, and, last year, Red Lobster was wobbling. Shunned by young diners and crowded by cheaper rivals, the chain would later report that its customer count had plunged 30 percent since 2019.

The slide was a devastating, slow-motion calamity for a brand that over the decades had introduced millions of Americans to seafood along with such nautical-themed desserts as Brownie Overboard. It had been a beloved special-occasion venue for middle-class diners, less expensive than white-tablecloth restaurants, classier than fast-food joints.

New management had arrived in 2020 and tried to revive the chain with the corporate version of heart paddles. Thai Union, a seafood giant based in Samut Sakhon, Thailand, administered the shocks in the form of stern lectures, surprise inspections and cost-cutting measures that strained the staff to its breaking point.

Now, by unveiling perpetual Endless Shrimp, Thai Union wanted Red Lobster employees to work even harder.

“When they dumped this on us in June, we’d already been squeezed to the bone,” said Malcom Clarke, then a service manager at the Red Lobster in Orem, Utah. “We got emails from corporate saying: ‘This is a free-for-all. Get that shrimp out as fast as you can.’”

Like a lot of former Red Lobster employees, Mr. Clarke speaks about the chain with a mix of anger and heartbreak. When he joined the company in 2019, it had a certain prestige. Just landing the job took months, a series of interviews and 11 weeks of training, widely considered the best in the industry. At the time, he and others talked unironically about the “Red Lobster family.” Managers spent years climbing the ladder, waiting for those on the top rung to move along or retire.

By last year, the spirit of warmth and generosity had vanished, and Endless Shrimp had made the dining room “hellish and chaotic,” as one manager put it. Some customers planted themselves there for hours, ordering nothing but shrimp and water.

“We called them campers,” said Zachary Spain, a manager at the Red Lobster in Times Square. “This one couple, they came in every Sunday, and I’d say they ate about 100 shrimp apiece, maybe 120. And we’d see people all the time, scraping shrimp into Tupperware on their lap.”

By January, Thai Union was done. Citing mounting losses, Thiraphong Chansiri, Thai Union’s chief executive, announced that the company was cutting all ties to Red Lobster, like a parent disowning a child. In a statement for this article, Thai Union said that it had little choice after exploring “all avenues to resolve Red Lobster’s onerous financial obligations” and investing hundreds of millions of dollars in the chain “during the most adverse market conditions in the company’s history.”

Those conditions included unforeseeable disasters, like Covid. But long before the pandemic began, Red Lobster was a company in decline. That never-ending $20 special was merely the final kick in the gut. For roughly a decade, the chain has endured goofs, pratfalls and neglect at the hands of a series of corporate parents. Too often, they behaved like one of those Tupperware-toting shrimp fiends, thinking mostly about how much profit could be scraped from the plates.

The Original Sin The first Red Lobster opened in Lakeland, Fla., in 1968, the brainchild of Bill Darden, a restaurant prodigy who had opened a 25-seat luncheonette in his native Georgia at the age of 19. The goal of Red Lobster Inns, as the chain was originally called, was to bring seafood to landlocked areas at affordable prices. To keep checks low, there were no place mats and no bread. There was no lobster, either, at least at first, because it was too pricey. As Mr. Darden’s partner, Charley Woodsby, explained in his autobiographical “Red Lobster: The Beginning,” the pair settled on “Red Lobster” because they liked its sound.

Abundance was a theme from the start. Early offerings included the Neptune Platter, which included fried shrimp, oysters, fillet of flounder, frog legs, scallops, deviled crab cake, fried crab claws, hush puppies and a choice of potato or coleslaw for $2.50, the equivalent of $22.60 today. The interiors featured ship wheels and fishing nets. Waitresses wore sailor tops. Lines formed outside the original restaurant starting at 4 p.m., an hour before opening.

In 1970, General Mills, wanting to expand beyond Cheerios and Betty Crocker, bought the company. By 1983, there were 350 Red Lobsters in 36 states. It was the largest table-service dining chain in the country.

“We didn’t envision this kind of success,” Mr. Darden said that year, as the company expanded into Japan, worried it had reached a saturation point in the United States.

General Mills added Olive Garden to its portfolio and in 1995 created Darden Restaurants as a stand-alone corporation traded on the New York Stock Exchange. (Mr. Darden died the year before; the name was a tribute.) In the ensuing years, the glow faded from Red Lobster. Prices rose as China discovered a taste for lobster in the 2010s, and shipping, labor and factory costs kept climbing. All this made the chain a little too expensive for its core audience. Instead of updating the look of restaurants and upgrading equipment, Darden siphoned off money to its faster-growing brands, like LongHorn Steakhouse and the Capital Grille.

At the same time, seafood was becoming a protein of choice. Americans now eat four more pounds of seafood per capita than they did in 1980, and restaurants have met demand by adding shrimp and fish to their menus.

“When Outback Steakhouse introduced tilapia, I remember thinking that they were playing in our sandbox,” said Melissa Coyle, who managed Red Lobsters for 24 years, most recently in North Carolina. “We didn’t evolve, we didn’t maneuver fast enough to get the next generation of guests.”

Ms. Coyle had started as a Red Lobster server in Colonial Heights, Va. In 2018, she moved with her husband and their children to the Raleigh area, where she oversaw 10 locations bringing in $35 million in annual revenue. She planned to stay with Red Lobster until retirement.

“It was a great company, a company with a culture that was all about respect and integrity,” she said. “If you told somebody you worked at Red Lobster, you said it with a certain amount of pride.”

There was pride but dwindling profits. Nudged by activist investors, Darden sold Red Lobster in 2014 to Golden Gate Capital, a private equity firm in San Francisco, for $2.1 billion. The deal led to what one former Red Lobster executive described as “the original sin.” Golden Gate sold the real estate under 500 restaurants for $1.5 billion.

The transaction, called a sale-leaseback, netted a quick and immense windfall for Golden Gate and its shareholders. It produced something else for Red Lobster managers: a new expense called rent.

“These clowns basically ransacked Red Lobster,” said Phil Kafarakis, president of the International Foodservice Manufacturers Association, which represents food companies that sell to restaurants. “Golden Gate — they’re finance guys. They were just making a quick buck off a wounded animal. And it was a shame because it was a great brand in a very difficult category.”

Golden Gate declined to comment. In theory, cash from sale-leasebacks can be poured into a business that badly needs it. And Golden Gate bankrolled upgrades, former employees say, including a Kitchen of the Future project that included new sauté stations and software to streamline orders.

It was enough to inspire hopes that a turnaround was possible. Then came a fortuitous brush with hipness. In 2016, Beyoncé suggested in unprintable lyrics from her single “Formation,” released ahead of her Super Bowl halftime appearance, that she rewarded a lover’s finest efforts with visits to Red Lobster. Sadly, the company took eight hours to respond to a viral tweet about the song by the singer John Legend, and that response — “‘Cheddar Bey Biscuits’ has a nice ring to it, don’t you think? #Formation @Beyonce” — did not impress.

“Yall had hours and this is what yall come up with?” was a typical disappointed reply on Twitter.

The slip-up underscored a broader problem. Young and Black diners were trickling into Red Lobster, and the company never figured out how to market to them. It took until July of this year, two months after the company filed for bankruptcy, for it to unveil a collaboration with the rapper Flavor Flav, a longtime fan of the brand.

By 2020, Red Lobster’s leases were a tightening noose. They stipulated 2 percent annual increases, which slowly ballooned into as much as 50 percent of revenue in some locations. Many of the restaurants were built decades earlier, in areas that were out of favor. Moving was either impossible or cost prohibitive. A bankruptcy document filed by new management at the company in May said that last year Red Lobster spent $64 million on rent at “underperforming” restaurants.

Some of them were underperforming for a reason. A combination of suffocating overhead and sagging revenue had shuttered them for good. But Red Lobster still had to pay rent.

By 2020, Golden Gate was apparently done with the chain. That year, it found a buyer.

‘They’re in Omaha!’ Thai Union is one of the most formidable players in the expanding, $360-billion-a-year global seafood market. Founded in 1977, it’s a publicly traded frozen-and-canned-seafood powerhouse with 12 production facilities on four continents and more than 45,000 employees. The company sells food for pets and people, through brands such as Chicken of the Sea. Last year, it booked $3.8 billion in revenue.

Thai Union also sells to restaurants, and Red Lobster had been a customer for years. A very important customer. The restaurant chain buys more seafood than many countries do. For Thai Union, controlling Red Lobster would be equivalent to a coffee bean company’s bagging of Starbucks.

Before Red Lobster, Thai Union had never owned a restaurant. In 2016, Thai Union purchased a minority stake in the chain from Golden Gate for $575 million. Four years later, Golden Gate sold its remaining equity interest to Thai Union, Red Lobster management, and a consortium of investors called Seafood Alliance. Thai Union ended up the largest stakeholder, with 49 percent of the company.

The timing was disastrous. The pandemic had devastated the restaurant industry, and Red Lobster, already weak, was hit harder than most chains. Its older-than-average customers took longer to return to in-house dining, and because seafood doesn’t travel well the chain had little takeout infrastructure.

“In weekly Zoom meetings, everything became about cutting costs and upselling,” said Kristen Green, who managed locations in Rochester, N.Y., and then Pittsburgh. “Instead of satisfying guests so they will return more often, it was all about cutting down labor expenses and getting people to order more appetizers, more entrees, more desserts.”

Thai Union was impatient for results. One executive said he had received an email demanding a 17 percent increase in sales. It was a huge ask. If a typical restaurant increases sales by 2 percent, that’s a triumph.

At corporate headquarters in Orlando, Fla., Thai Union’s brass also made a memorable impression. Mr. Chansiri, the chief executive, had recruited Paul Kenny, a gray-haired Australian who had spent years in the chain restaurant business in Bangkok, to serve as the liaison to Thai Union. He arrived with plenty of good ideas: He wanted energy in the room, servers that smiled and customers eager to return.

But former employees — who requested anonymity because they expect to fight with Red Lobster’s new management over money — say he had a caustic style. He belittled frontline employees and C-suiters alike. During a meeting in Orlando, he banished a vice president to the outermost ring of chairs in a meeting when she gave an answer he didn’t like. (Mr. Kenny did not respond to repeated requests for comment.) Red Lobster’s chief executive, a much-admired industry veteran named Kelli Valade, left in April 2022, a mere eight months after she had started. Mr. Kenny took over.

Now fully in charge, Mr. Kenny and Mr. Chansiri started dropping by Red Lobster locations around the country. Their visits were mostly unannounced and filled managers with something close to terror. To prepare, meager resources were spent on repairs and fresh coats of paint. Servers rehearsed company scripts. Chefs were quizzed on recipes. As the touring executives traveled, their location was shared on a group text. (“They’re in Omaha!”)

The preparation never sufficed. No kitchen was clean enough. No waiter was prompt enough. The cooking was routinely savaged. Employees were occasionally left in tears.

In 2022, days before the start of the company’s General Manager Conference, an annual meeting that had long been an uplifting event, all six senior vice presidents of operations at Red Lobster were fired, along with the chief operating officer. When 700 managers and executives showed up in a hotel conference room in Dallas, they braced for a scolding.

When Mr. Chansiri took the stage, they got it. He said he was shocked by the financial performance of the chain and disappointed by the restaurants he had visited. Managers he and Mr. Kenny questioned didn’t know the answers to basic questions — such as, What percent of your revenue is from alcohol? — and the food he sampled was occasionally lousy. During his presentation, he posted photos on a huge screen of subpar dishes that he had been served on his tour.

Mr. Chansiri included a note of doom: If the chain didn’t vastly improve, it wouldn’t be around in a year.

“There was a scare culture at Red Lobster after that conference,” said Steven Varsava, a manager at the Murray, Utah, location. “I noticed a change in my director. He went from a cool guy to totally stressed.”

Many people, though, knew that Mr. Chansiri was right. Managers should know how much of their revenue comes from alcohol. Dishes should look consistently appealing. Red Lobster needed a shake-up.

In the months that followed, management introduced a new quality, service and cleanliness program as a kind of reset. Monthly audits were announced, too, along with disciplinary action for managers at locations that weren’t up to scratch.

The problem was that all of the changes required funds, and no money was forthcoming.

Frosty Boxes of Shrimp Desperate to increase traffic and sales, Mr. Kenny and his colleagues tried a new product. They rolled out Cheddar Bay Shrimp, which used seasoning from the popular buns that are given out free at Red Lobster. When that dish failed to catch on, it was Hail Mary time.

Ultimate Endless Shrimp had long been an annual promotion, timed for the back-to-school period in September, when restaurant numbers dip. The rest of the year, it was a Monday-only offering. Now, it would be as permanent as the plastic bibs. The company announced on June 26, 2023, that Endless Shrimp was “here to stay!”

The impact was instantaneous. There were lines out the door — because many guests wouldn’t leave. For a few months, there were no time limits, and no rules against sharing with friends or demanding to-go bags. And the influx of shrimpaholics skewed young and boisterous, changing the ambience of the restaurant and putting off core customers.

“Endless Shrimp brought out the worst in people,” said Mr. Varsava, who was then working in the Orem restaurant. “They complained that the shrimp was not coming out fast enough, or that it sat under the heat lamps for too long. And when they complained to corporate, it counted against our bonus.”

Overstretched waiters were asked to cover eight tables instead of four. They quit so often that Mr. Clarke spent much of his time trying to recruit new hires.

“I’d do 16 interviews over the weekend, and hire them all,” he recalled. “Three would show up. If we were lucky, they’d last a week or two. A bunch quit the same night they started. And I totally understood. We were hiring these kids and treating them like animals.”

For some locations, Endless Shrimp was a disaster in other ways. To make publicity easy and add a bit of buzz, the promotion cost the same $20 in rural Ohio as it did in Manhattan. That meant that in higher-income ZIP codes, Red Lobster lost about $3 every time an Endless Shrimper walked through the door.

This wouldn’t have mattered if, as hoped, diners had added high-margin items, like mango mai tais, to their tabs, or brought friends who wanted $40 surf and turf. It didn’t happen. In Orem, the average check fell to $28 from $36.

Former employees have a theory about why Endless Shrimp endured: Thai Union had decided that Red Lobster was a goner. And if Red Lobster could not be saved, Thai Union wanted to sell as much seafood as possible to the chain while it still could. (The company declined to comment on this point.)

True or not, in April of last year, Red Lobster canceled its contracts with two competing suppliers of breaded shrimp, according to a Red Lobster bankruptcy filing. It did so “under the guise” of a quality review, the filing stated, and “in apparent coordination with Thai Union.” This left “Thai Union with an exclusive deal that led to higher costs to Red Lobster.”

Thai Union didn’t actually provide endless amounts of shrimp. Shortages were common. An asterisk followed by the phrase “while supplies last” was added to some menus. And not only were Thai Union’s shrimp shipments sporadic and pricey. Some of the boxes were covered with frost.

“When they first started Endless Shrimp, Thai Union gave us fresh shrimp,” Mr. Varsava said. “As it progressed through the year, the dates went further and further in the past.”

“At that point,” Mr. Varsava went on, “I assumed that Thai Union bought us to clear out its inventory.”

In an email, a Thai Union spokesman said the company had controls that prevented it from sending shrimp that was beyond its sell-by date.

“At all times during Thai Union’s investment, operational,” the spokesman wrote, “procurement and supply decisions were conducted in accordance with the highest standards.”

A New Diet By September of last year, Red Lobster had begun its death spiral. The company stopped paying many of its vendors. In Orem, a grease drain backed up on a Friday night, leaving an inch of fetid, oily water on the kitchen floor. When Mr. Clarke informed his boss, the instructions were clear: Do not call a plumber until Monday because the cost of a weekend visit will be much higher.

“If the health inspectors came Saturday or Sunday, we would have been shut down,” Mr. Clarke said. “I had to bring extra socks to work because they kept getting soaked.”

Dropping Red Lobster, the Thai Union spokesman wrote in the email, was the company’s only choice. “Despite an unprecedented global pandemic, higher interest rates, rising material and labor costs, an increased competitive environment, and rigid and unfavorable lease obligations, Thai Union continued to support the business and explored all avenues to resolve Red Lobster’s onerous financial obligations,” the spokesman wrote.

When Red Lobster filed for bankruptcy in May, it closed 140 restaurants — 544 have remained open — and stated that the chain was $1 billion in debt, having posted a $76 million net loss in 2023. Thousands of employees paid a more personal price. Many learned they were jobless when they showed up to find their restaurants had closed for good.

Ms. Coyle, the former North Carolina manager, ditched her plan to retire with the company. The Red Lobster she loved was gone, and in 2022 she found a new position at another chain. But still feels haunted by the professional relationship that defined her career.

“I liken it to a divorce,” she said. “When you’re with a company for 24 years, it sort of becomes your belief system.”

Not long ago, she agreed to meet me at the Red Lobster near Raleigh where she once worked and that is now shuttered. On the morning of the planned rendezvous, she changed her mind, and we met for breakfast in a strip mall instead.

“I was with the company my entire adult life,” she said. “Red Lobster afforded me a lot of good things in this world. It allowed me to raise my kids. And the struggles that they had affected me and my family —” She stopped for a moment. Tears began to roll down her face.

Today, Red Lobster is about to get a new owner. Fortress Investment Group in Manhattan, an investment management firm, made the only offer to acquire the chain as it languished in a bankruptcy court in Florida. On Thursday, the judge overseeing the case approved the deal. The price, $375 million, is a dizzying discount from the company’s $2.1 billion valuation 10 years ago.

Mr. Chansiri, for his part, would like to move on. During an earnings call in February, analysts peppered him with questions about the highest-profile misfire in Thai Union’s history.

“Red Lobster is done and over,” he said emphatically, through a translator. He seemed to want an end not just to Red Lobster-related questions, but to Red Lobster-related thoughts.

“Other people stop eating beef,” he said with a pained grin. “I’m going to stop eating lobster.”

Living in Florida by some of the best seafood restaurants on Earth, I never seriously considered ‘Red Lobster’ as a ‘great’ seafood restaurant. It was just one step up from Captain D’s or Long John Silvers......................

The article is looking backwards and not addressing changes Red Lobster is making now, including a new CEO. Full disclosure: I am neither “Pro” nor “Con” Red Lobster, but its cuisine and style has never been among my favorites.

Among employees, news that Endless Shrimp would, in fact, never end was greeted with dread.

Especially because of the “Canadians” who don’t tip.

Wife and I tried to go there Sunday. We stood and waited at the front door for someone to greet and seat us. We waited 5 minutes and no one showed up. We left. Won’t go back either. Red Lobster can die.

I will acknowledge this seems to be a problem everywhere, hosts don’t greet diners promptly, and we have encountered this elsewhere. Is it simply the staff hoping the customers go away?

I remember my first meal at a Red Lobster in 1977, right after my discharge from the Marines. It was, okay, nothing special, but expensive at $20!...................$101 in today’s money..............

You know your “All You Can Eat” fiasco is doomed once the Tik Tokers turn it into a “challenge.” Shut ‘er down!

Ours closed last month.

The problem is the hires....................

What gets me is these places letting people sit there for hours stuffing themselves. You would like to think that there would be a reasonable time limit such as an hour or so and then you can, politely at first, ask such people to leave. I guess it should not surprise me as how both greedy and overall rude that many people are nowadays.

Especially because of the “Canadians” who don’t tip.

Our last visit to RL was 10 years ago outside of Philly. Felt like a night at the appolo pregame hotspot.

Golden Gate Capital is an American private equity firm based in San Francisco. The firm makes investments in a number of select industries, including technology, financial services, retail and industrial, through leveraged buyout transactions, as well as significant minority purchases and growth capital investments. As of April 2018, it had over $15 billion in assets under management.

The firm was founded in 2000 by former investment professionals from private equity firm Bain Capital and its affiliate, Bain & Company, led by former Bain Capital partner David Dominik.

On July 28, 2014, Golden Gate completed the purchase of Red Lobster from Darden Restaurants, for $2.1 billion.

Oddly enough, I was thinking about the other day about the Ponderosa (Red Lobster replaced many Ponderosa restaurants in the mid 1980s when they closed) and how nice it would be to bring back that chain up here in the Great White North, with the salad and dessert bars that were basically all you can eat, along with the soups. Bet you’d have to be careful of the Tik Tokers as what you mentioned in your post, lol.

very few.

What used to be ‘American’ companies are now basically foreign owned.................

“The problem is the hires....................”

We have a BINGO.

While not a RL, my wife and I had a dining experience last night that seems to occurs way too often.

A too-long wait to be seated, a frantic, unfriendly server who got the order wrong and acted like it was our fault, sat and waited forever for take home boxes and our check, etc.

We’re not chronic complainers, but when we mentioned our dissatisfaction to the restaurant manager/owner he apologized and said, “It’s a struggle to find people that will even show up for work.”

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