Red Lobster lost millions on its endless shrimp disaster. Shareholders say it was a ‘car crash’ designed to squeeze profits
Red Lobsters’ infamous $20 “Ultimate Endless Shrimp” promotion nearly sank the restaurant chain, now shareholders are alleging the promotion was a ploy by a former majority shareholder based in Thailand to squeeze as much benefit as possible from the eatery. A May lawsuit filed in Orange County, Fla. by a trust representing shareholders alleged that Thai Union Group, one of the world’s largest seafood producers whose shares trade on the Stock Exchange of Thailand (SET), exploited its controlling stake, CNBC reported. “Thai Union doubled down on a campaign to squeeze out every drop of value that it could through uneconomic contracts that benefited Thai Union and made no economic sense for Red Lobster,” the lawsuit read. In fact, the endless shrimp promotion at one point left the company $11 million in the red in a single quarter. Red Lobster and Thai Union did not immediately respond to Fortune’s request for comment. The shareholders claim they are owed millions after the chain filed for Chapter 11 bankruptcy in May 2024 and are also looking to dissolve some $32 million in transactions that Thai Union allegedly pressured the chain to enter into in 2023, Bloomberg reported. They are demanding a jury trial to determine the damages they are owed. Red Lobster had run the endless shrimp offer as a seasonal promotion for two decades, and it consistently helped bring in customers. But the offer worked was temporary. Instead, the shareholders allege, Thai Union pushed to make the promotion permanent starting in 2023 and turned “a successful legacy Red Lobster strategy” into “a car crash,” CNBC reported, citing the lawsuit. Thai Union bought a minority stake in Red Lobster in 2016 and in 2020 led a buyout that gave it majority control. Thai Union then helped install Paul Kenny, a shareholder and experienced restaurant exec, as interim CEO in 2022. Soon after, the shareholders allege, Kenny pushed to make the endless shrimp promotion permanent and to make Red Lobster’s c