Michael Paine loved Red Lobster’s coconut shrimp. Maybe too much.
He forked over $25 for the chain’s all-you-can-eat shrimp deal, and got 64 coconut, garlic and dragon-style pieces for his money. “I was very full,” he says.
While Paine left satisfied, Red Lobster seems to be drowning in regret.
The promotion proved a shipwreck for one of America’s oldest casual-dining chains, with about 600 locations. On Sunday night, it filed for Chapter 11 bankruptcy, aiming to hand ownership to creditors. Elevated debt and slowing traffic had also left the company floundering.
The news sent nostalgia seekers scurrying to dine at the nautical-themed chain, which is still doing $2 billion in sales a year.
Some fans even dreamed of owning Red Lobster history, as dozens of slated-to-close locations hawked tea brewers, beer dispensers and other kitchen equipment. The auctions drew calls from consumers who just wanted a lobster tank for their homes.
“I didn’t know there was this level of passion,” says liquidator Neal Sherman.
Paine, a 45-year-old cybersecurity specialist grew up celebrating birthdays at the Nanuet, N.Y. location, mesmerized by the lobster tanks and the cheddar biscuits.
Earlier this month, he returned to find the dining room nearly empty.
“It is sad, very sad,” says Paine, whose Nanuet location is now listed as closed. “There are no other affordable seafood restaurants.”
Jess McKay, a 33-year-old fitness instructor from Ontario, Canada, savors childhood memories of coconut shrimp at Red Lobster with her mom and grandmother.
When old enough to imbibe, she asked her family to take her to Red Lobster—for a piña colada.
The jumbo shrimp issue
When McKay, now a New Yorker, learned about the looming bankruptcy, she and her husband hustled over to the Times Square location before the Westminster dog show. They indulged in lobster dip, crab legs and three varieties of shrimp for $91.
“With the unknown future of the company, we wanted to get in this meal before any more changes happened,” she says.
Red Lobster famously gave families an affordable taste of buttery crab legs. Wood-paneled dining rooms, adorned with lighthouse and seagull pictures, transported patrons to simpler times, when food was cheaper and the biscuits never ended.
Legendary restaurateur Bill Darden brought this vision to life in 1968, founding Red Lobster in Lakeland, Fla. An investment by General Mills propelled Red Lobster to rapid expansion. “Popcorn Shrimp” in 1974 and “Lobsterfest” in 1984 became menu hits.
By the 1990s and 2000s, Red Lobster reigned as the country’s biggest casual dining seafood chain.
Red Lobster has struggled in recent years, finding it harder to attract diners than when it was part of Darden Restaurants, which also owns Olive Garden.
Owner Thai Union Group—one of the world’s biggest canned-tuna producers and Red Lobster’s longtime supplier—said it tried to keep the chain afloat. But Red Lobster had previously sold its real estate, leaving it less able to pay down debt.
It launched a $20 all-you-can-eat shrimp deal in June, allowing dine-in customers to scarf down unlimited garlic shrimp scampi, coconut shrimp or shrimp linguini alfredo.
The promotion worked too well. Thai Union told investors in November that the shrimp deal contributed to a $11 million loss for Red Lobster for the quarter.
“We are back to a challenging situation at Red Lobster,” Thai Union Chief Financial Officer Ludovic Garnier said in an investor call. “We don’t earn a lot of money at $20.”
‘Kind of trash’ but ‘delicious’
Americans, he also noted, were tightening purse strings and choosing fast food, or opting for cheaper fare when dining out. This year, other chains, including Tijuana Flats and Sticky’s Finger Joint, have also filed for bankruptcy.
Brit Swider, a 35-year-old nonprofit director and Charlotte, N.C., native, fondly recalls lugging her Beanie Babies and other birthday gifts to Red Lobster for childhood parties—a rare treat for her family. Now a vegetarian, Swider seldom frequents chains, yet makes exceptions for occasional Red Lobster visits.
“It’s kind of trash but also delicious,” says Swider, who noshes on shrimp scampi, salad with Thousand Island dressing and a Dr Pepper—with a side of slight sheepishness: “This isn’t how I usually treat my body.”
Swider recalls how she confessed one odd thing about herself when she was dating her now-husband: she digs Red Lobster. She recently dragged him to one after hearing news about closings.
“I don’t think I can handle losing this right now,” she says.
Despite officially filing for bankruptcy Sunday, Red Lobster had a lot of fish in its sea. It buys 20% of North American lobster tails and 16% of rock lobsters sold worldwide, serving 64 million annually, it said in its bankruptcy filing.
But Red Lobster had accrued nearly $300 million in debt to creditors. With less than $30 million in cash by late 2023 and unpaid vendors, the all-you-can-eat shrimp deal was a questionable strategy and is being probed by the creditors, its CEO said in the bankruptcy filing.
Last week, an auction for the contents of around 50 shuttered Red Lobsters started with $1 bids. The offerings from one San Antonio location fetched $15,500, according to the listing, and some spots reeled in twice that amount.
The contents of all auctioned locations had sold by last Friday. Independent restaurants and wholesalers won most auctions, but consumers also called.
“I would have to explain, it’s a truckload of equipment,” says Sherman, the liquidator. “Do you want to bring a 10-foot griddle to your house?”
Despite Red Lobster’s woes, some chains are still diving into bottomless deals. Buffalo Wild Wings recently announced an all-you-can-eat wings and fries deal for $19.99 twice weekly.
“Please don’t bankrupt us,” the chain said in a tweet.
WSJ | Write to Heather Haddon at [email protected]