Red Lobster’s “Endless Shrimp” Fiasco is The Gift That Keeps on Giving…

After months of swimming in debt (and endless shrimp), Red Lobster, the seafood giant finally got a lifeline in the form of Fortress Investment Group, which now owns the struggling chain. 

So, what does this mean? Well, the iconic chain famous for cheddar biscuits is ready for a comeback. But not without some serious scars from its latest battle: Chapter 11 bankruptcy.

How did we end up here? Well, Red Lobster decided to go full YOLO with their “Ultimate Endless Shrimp” promo last year—$20 for all-you-can-eat shrimp. Shocking no one (except maybe themselves), it backfired spectacularly. They ended up $11 million in the hole because, surprise, people will eat their body weight in shrimp if given the chance. 

Betting the entire ocean on shrimp? Not the brightest move. But wait, it gets worse. While they were handing out shrimp like halloween candy, they were also bleeding cash on leases—$190.5 million in 2023 just to keep half-empty restaurants running. Imagine paying that for reheated seafood.

So, what did they do? They filed for Chapter 11 bankruptcy in May and started axing underperforming locations. More than 50 restaurants closed, equipment was auctioned off, and by the time the dust settled, they were down to 578 locations and sinking fast.

Fortress Investment Group swooped in like they were rescuing a sinking ship, which, let’s be honest, they kinda were. They cleared out a hefty chunk of Red Lobster’s debt and casually threw $70 million into the pot, like it was just another Tuesday for them. U.S. Bankruptcy Judge Grace Robson gave it all the thumbs up, meaning Red Lobster now gets a fresh start. Hopefully, they can scrub off the bankruptcy stench and keep from going belly up again. Fingers crossed, right?

Fortress wasted no time installing new leadership. Meet Damola Adamolekun, former P.F. Chang’s CEO, now tasked with reviving Red Lobster. If he can make overpriced lo mein work, maybe he can save cheddar biscuits too.

(Source: PF Chang’s)

Still, the shrimp saga isn’t over. Thai Union Group, Red Lobster’s former largest owner, is fuming over that infamous shrimp promo, claiming it left them with sky-high supply costs. Now they’re duking it out in court, each side blaming the other for the financial mess. Thai Union says Red Lobster should’ve known better, while Red Lobster’s new owners are investigating whether Thai Union had a hand in pushing them overboard.

On top of all that, Red Lobster is trimming the fat even more. By the time they officially exit bankruptcy, they’ll be down to about 544 locations across the U.S. and Canada—34 fewer than when they filed. Maybe this is part of the new strategy? Fewer locations, fewer shrimp disasters, and more cheddar biscuits for everyone else. Sounds like a win to me.

With 30,000 employees still on deck and $70 million in fresh funding, Red Lobster has a shot at staying afloat. Let’s just hope they’ve learned their lesson from that shrimp debacle. And hey, if all else fails, maybe they can start charging for those famous cheddar biscuits. Honestly, we’d all still pay for them.

But, but, but…

While Red Lobster is scrambling to claw its way out of a sea of debt and shrimp disasters, our Stocks.News alert yesterday officially hit a massive +162.08% gain in—wait for it—LESS than 24 hours after we published it. And get this, not only did our premium members feast on those gains, but it also marks our fifth triple-digit winner in a row. How’s that for a streak?

So, why waste your time stressing about Red Lobster getting its house in order when Stocks.News premium members are out here capitalizing on explosive market opportunities every single week?

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Until next time, stay safe and stay frosty, friends!

Stock.News does not have positions in companies mentioned.