An amusing story that illustrates perfectly how very far from anything resembling small-business-oriented laissez-faire capitalism we’ve come.
How to Murder a Popular Restaurant Chain With This 1 Weird Trick
Following the unexpected closure of dozens of locations last week, Red Lobster completely expectedly filed for bankruptcy protection this week — and how the seafood chain ended up in Chapter 11 restructuring is a fascinating story of bad decisions, spastic leadership, and shortsighted greed. It’s that last element that really tells the tale.Reb Lobster “temporarily closed” 87 restaurants last week, but as USA Today reported, some of them have “their kitchen equipment up for auction on an online restaurant liquidator.” Temporary, eh?
CNN’s Nathaniel Meyersohn wrote Monday that the chain’s “misguided endless shrimp promotion drove it into bankruptcy.” If you missed the news — I knew about it but my efforts at getting back into shape couldn’t afford it — last summer, Red Lobster made their $20 all-you-can-eat shrimp special a permanent menu item.
“The plan, as far as I can tell,” Luke Winkie wrote for Slate, “was for guests to fill up on just enough shellfish to preserve Red Lobster’s profit margin. It backfired spectacularly: The restaurant’s clientele scarfed down enough shrimp to accumulate an $11 million operating loss in the fourth quarter of 2023.” But that $11 million loss was only a small fraction of the company’s overall $72 million loss last year.
There’s so much more to the story than a money-losing menu item.
Business analyst Trung Phan posted to X that “the interesting part” behind the all-you-can-eat shrimp “is that one of the chain’s owners is Thai seafood firm Thai Union… and it may have used Endless shrimp to dump its own shrimp supply through the 578 restaurants in North America.” Restaurant Business Online reported that bankruptcy court documents question “whether the control Thai Union exerted over the supply chain process drove up costs for the chain, worsening its financial condition.” Quality control was reportedly an issue, too.
“Quality”? At Red Lopster?!? The McDonalds of seafood restaurants, first-choice favorite of Neegrows nationwide and hardly anyone else?
Now you’ve heard everything, right?
Wrong.
There’s still more.
And of course there is, Stephen wouldn’t lie about a thing like that. Thankfully, down South we’ve always been blessed with enough old-school “fish camps” that no sensible person had to even think about resorting to dumps like Red Lopster *shudder* for their seafood needs anyway, so no great loss.
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I would think Creditors and other Shareholders might have a case against Thai Union.
Mensa might have a better case against creditors and shareholders of Thai Union. 😉
In either situation, only the lawyers make any money.
A year or so back I was out of town looking for a sit down eatery, and there was a red lobster, so I thought “how bad can it be?”. Once was enough. The food was not very good. A McDonald’s fish sandwich is far superior fare.
Must be different back yonder.
Hereabouts, they do a great job, and are a higher-end of middle eatery.
They also lack any competition from any sort of “fish shacks”, and what few of the latter there are invariably are roach-infested Julio-and-Maria establishments selling trash fish simmered in grease.
I don’t know where they started, but it appears they suffered a massive failure of franchisee or location management selection, to dig themselves so far into a hole.
There could be regional variation. The food where I ate was pretty poor IMO. I do have a home on the coast and I do eat fish just pulled out of the water, so my comparison can sometimes be unfair. OTOH, I also eat at fish places, known in these parts as “fish camps” and they are far superior to what I ate at the red lobster. Heck, Long John Silvers is better than RL IMO. It’s based on a single experience and might not be a true reflection of the norm.
I eat at the sole surviving H. Salt hereabouts regularly. Literal mom-and-pop Viet couple have been running it for 25+ years, and it’s a great storefront diner. It doesn’t hurt that when I walk in, the owner at the grill already knows my order by heart.
Place is absolutely packed on Friday nights, btw.
Red Lobster locally is an indoor sit-down, high quality surf-and-turf, date night restaurant, reservations recommended but not required, and the food and service are great. Packed with people waiting for a table from Friday to Sunday nights, and busy seven nights a week.
I’m sure your local experiences are accurate, so I’m thinking someone, somewhere in their chain, got the business plan horribly bu-fu’ed for them to go belly up.
Idiots running a business poorly will fail. 100% of the time.
This is just gravity, working.
News since…never.
Restaurants are effected greatly by that gravity.
Not sure if any still have “all you can eat”, but that used to be a normal part of the fish camp style restaurants. Not only did they have “endless shrimp”, they had endless oysters, flounder, and catfish, along with hush puppies, fries, and iced tea…