Red Lobster's 'Everyday $20 Ultimate Endless Shrimp' promotion has become the center of a lawsuit filed by the restaurant chain's creditors against former controlling shareholder Thai Union, a seafood producer with shares traded on Thailand's stock exchange [1]. The suit, filed in Orange County, Florida in May 2024 by a trust representing Red Lobster creditors, alleges that Thai Union knowingly pursued uneconomic contracts that benefited itself at the expense of Red Lobster, despite being aware in 2023 of the chain's significant financial headwinds and risk of insolvency [1].
The lawsuit claims that Thai Union and then-interim CEO Paul Kenny engineered and implemented the shrimp promotion over the objections of Red Lobster employees not affiliated with Thai Union. The promotion reportedly led to operational disruptions, with restaurants running out of shrimp and being unable to turn over tables, which the suit describes as having 'immobilized' locations nationwide [1]. The creditors allege that, even after it became clear the promotion was damaging Red Lobster's finances, Kenny continued the offering, resulting in tens of millions of dollars in overpriced shrimp orders for Thai Union and leaving Red Lobster with a massive oversupply [1].
Red Lobster defaulted on a $275 million term loan from Fortress Investment Group in September 2023 and ultimately filed for Chapter 11 bankruptcy protection in May 2024, closing restaurants across the U.S. The company cited increased competition, expensive leases, a broader pullback in consumer spending, and the fallout from the shrimp promotion as contributing factors [1]. Thai Union divested its stake in Red Lobster in May 2024 and, according to the lawsuit, did not contribute capital during the bankruptcy process [1].
After exiting Chapter 11 in September 2024, Red Lobster was acquired by private investor group RL Holdings, reportedly led by Fortress, which continues to own the chain [1]. The lawsuit seeks a jury trial to determine damages and alleges that Thai Union treated Red Lobster as a distribution arm for its own products, prioritizing its interests over the restaurant chain's viability [1].
CONCLUSION
The lawsuit against Thai Union highlights the severe financial and operational consequences of Red Lobster's 'Endless Shrimp' promotion, which creditors allege was engineered for Thai Union's benefit and contributed to the chain's bankruptcy. With Red Lobster now under new ownership, the outcome of the legal proceedings could have further implications for both companies and their stakeholders.