• by Teresa Buyikian , May 21, 2024

Most were not surprised to hear the announcement that Red Lobster had filed for Chapter 11 late Sunday evening. The chain had just suddenly shuttered 87 locations, spanning across 27 states in the U.S., as reported last week.

Yet the the OG fast casual restaurant’s famous endless shrimp entrees may have a lot to do with the chain’s decline. In late 2023, the Ultimate Endless Shrimp promo led to an $11 million quarterly loss, per Fast Company.

Then there are the rising supply costs due to the chain’s owner, Thai Union, which is under investigation “for the role [the company] played in the restaurant chain's endless shrimp" promotion that caused $11 million in losses, per court documents, according to Reuters. The article continues to note that Red Lobster said the shrimp "debacle was part of a pattern of mismanagement by the global seafood company that owns most of its equity and supplies shrimp to its restaurants.”

But in fact the chain’s actual foot traffic had been in decline since February 2022, per foot traffic analytics firm Placer.ai.

“The chain was seeing year-over-year visit declines through much of 2022 and the first half of 2023 when the company brought back the ‘Ultimate Endless Shrimp’ promotion in the summer of 2023,” said Placer.ai Head of Analytical Research R.J. Hottovy in an email to QSR Insider. “That helped to drive strong year-over-year visits, but as Red Lobster's parent company discussed in its third-quarter 2023 update, it also negatively impacted the chain's profitability.”

So does this mean the end to endless shrimp and cult favorite Cheddar Bay Biscuits?

Biscuit fans, fear not. The buttery biscuit mix will remain available at grocery stores across the county. "There are no current changes to the Red Lobster At Home product line, which includes the Cheddar Bay Biscuit Mix," Lori Cherry, director of communications and corporate public relations at Red Lobster, told USA Today. In addition to Cheddar Bay Biscuit Mix, the product line also features frozen Cheddar Bay Biscuits, Gluten-Free Cheddar Bay Biscuit Mix, Coconut Shrimp Bites, and Cheddar Bay Biscuit Shrimp, among other products.

And for those who love the Red Lobster dine-in experience? “Red Lobster's restaurants will remain open and operating as usual during the Chapter 11 process," with “added improvements, simplif(ing) the business through a reduction in locations, and pursu(ing) a sale of substantially all of its assets as a going concern,” per the brand. The chain also said it has been “working with vendors to ensure that operations are unaffected with a $100 million debtor-in-possession ("DIP") financing commitment from its existing lenders.”

“This restructuring is the best path forward for Red Lobster,” said Red Lobster CEO Jonathan Tibus in the announcement. “It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth. The support we've received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests."