• by Tanya Gazdik , 9 hours ago

Red Lobster’s Endless Shrimp seemed like a brilliant promotion -- at least from a publicity standpoint. 

While wildly popular with customers, offering unlimited premium shrimp at low fixed prices caused massive financial losses, shifting diners away from profitable items and ultimately pushing the chain toward Chapter 11 bankruptcy in 2024, according to Fortune.

“A $20 all-you-can-eat shrimp deal helped push Red Lobster into bankruptcy,” according to Inc. “However, a new lawsuit alleges it was never just a bad business decision—but intentional.”

The suit alleges that Thai Union—a Bangkok-based seafood conglomerate that processes and sells roughly $4 billion worth of seafood annually under brands including Chicken of the Sea—was aware as early as 2023 that Red Lobster was facing significant financial headwinds and risked insolvency.

“According to the suit, filed last month in Orange County, Florida, seafood supplier Thai Union Group treated Red Lobster as a distribution arm for its own products, even when that hurt Red Lobster, paving the way to its bankruptcy in May 2024,” according to Nation’s Restaurant News. “The alleged self-dealing culminated with Red Lobster’s disastrous Ultimate Endless Shrimp promotion in 2023, which offered customers unlimited servings of shrimp for $20. The lawsuit says the deal generated tens of millions of dollars in overpriced shrimp orders for Thai Union while hammering Red Lobster’s operations and bottom line.”

The suit names 13 defendants, including Paul Kenny, a Thai Union employee who also served as Red Lobster’s CEO for much of the period in question. It calls for a jury trial to determine the damages owed by the defendants. 

“In May 2023, Kenny ordered Red Lobster to launch Ultimate Endless Shrimp for $20,” according to the lawsuit. “Red Lobster had offered the deal in the past, but as a limited-time special. Under Kenny, it would be available every day. He also pushed the chain to include higher-quality shrimp in the offer without raising the price point. This was despite objections from Red Lobster employees, who told him the deal would lead to losses beyond whatever traffic it generated.”

Thai Union doubled down on a campaign to squeeze every drop of value it could from Red Lobster, creditors said.

“Thai Union had bought a minority stake in Red Lobster in 2016, then effectively controlled the company after teaming up with another related shareholder in 2020 for a majority stake and three out of five of Red Lobster’s board seats,” according to CNBC. 

It later divested its stake in May 2024, and the suit alleged that it did not contribute any capital in the Chapter 11 process.

“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 lawsuit said.

The company exited Chapter 11 in September 2024 after being acquired by private investor group RL Holdings, reportedly led by Fortress. RL Holdings still owns Red Lobster.

Red Lobster brought back the endless-shrimp promotion in April, according to its website, though it said the promotion was for a limited time and didn’t provide the cost. The website currently says it is "ending soon," "not available on holidays" and is "dine-in only."