Turns Out Red Lobster's Shrimp Deal Was a Real 'Car Crash'

Red Lobster's "endless shrimp" promo is now at the center of a courtroom battle. A trust representing the restaurant chain's creditors has sued former controlling shareholder Thai Union in Florida, accusing the seafood supplier of prioritizing its own bottom line, even as Red Lobster slid toward bankruptcy, reports CNBC. The suit says Thai Union, which held effective control from 2020 until May 2024, used "uneconomic" supply contracts and pushed Red Lobster to buy its shrimp at inflated prices while blocking a rival supplier. The plan was to "squeeze every drop of value" out of Red Lobster, the suit notes, per Bloomberg.

The complaint calls the unlimited shrimp offering akin to a "car crash," per CNBC. According to the filing, Thai Union and then-interim CEO Paul Kenny drove the $20 all-you-can-eat shrimp deal over internal objections, leaving some locations overwhelmed, short on shrimp, and unable to quickly turn tables. When the promotion's financial damage became clear, the suit alleges, Kenny kept it going, generating "tens of millions" in extra shrimp orders and a costly surplus.

Red Lobster defaulted on a $275 million loan in 2023 and filed for Chapter 11 in May 2024, partly tied to the shrimp promotion, before emerging under new owner RL Holdings in September of that year. WBNS reports that the company lost about $11 million after making the shrimp promo permanent pre-bankruptcy. The current promotion, which was brought back in April, was set to be for a limited time only. Thai Union hadn't responded to CNBC's request for comment as of publication time.