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Red Lobster, a large restaurant chain in the United States that employs 55,000 people, is reportedly considering filing for bankruptcy. 

The seafood giant, known for its budget-friendly promotions, has begun exploring the possibility of bankruptcy after launching the Ultimate Endless Shrimp deal in June 2023. The deal initially aimed to increase customer foot traffic by offering unlimited shrimp for $20.

This promotion, intended to be a temporary marketing strategy, was made a permanent fixture due to its initial popularity, mirroring a similar financially disastrous endless crab promotion in 2003. Jonathan Maze, editor-in-chief of Restaurant Business Magazine, commented that the Endless Shrimp deals might symbolize desperation or poor management, reflecting deeper systemic issues within the company.

Financial documents reveal that despite incremental price increases to the shrimp deal—rising from $20 to $25—the chain reported significant operating losses of $11 million and $12.5 million in the third and fourth quarters of 2023, respectively. Ludovic Regis Henri Garnier, CFO of Red Lobster’s parent company Thai Union, noted in the Q3 earnings call that the low price was a calculated risk to boost patronage, a strategy that ultimately did not pay off. Early in 2024, Thai Union declared its intention to disengage from Red Lobster, pointing to the negative financial impact on its operations and stakeholders.

Financial experts have argued that longstanding costly leases and escalating labor costs are worsening the chain’s economic problems, with no way to avoid bankruptcy.