Endless Shrimp, Endless Troubles: Inside Red Lobster’s Bankruptcy

Red Lobster filed for bankruptcy on Monday after a difficult week that saw nearly 100 locations close. The chain has struggled over the past decade with multiple ownership and leadership changes. One failed effort to revive the business was the Endless Shrimp promotion, offering unlimited shrimp for $20. This backfired, resulting in an $11 million operating loss in Q4 2023 as customers consumed far more shrimp than anticipated.

While the Endless Shrimp deal contributed, Red Lobster's decline stems from broader financial issues, such as selling its properties and leasing them back under costly terms, significantly raising overhead costs. Conversations with laid-off employees revealed the strain the promotion put on staff, highlighting the challenges of dealing with patrons who overstayed and overate.

James Berke, a former employee from New Jersey, recalled a customer who consumed 16 rounds of shrimp scampi over two hours. Berke noted that the $20 price point was low compared to the average $35 entree, leading to a drop in tips. Other employees shared similar stories, with one witnessing a solo diner consume 30 orders of fried shrimp over four hours.

The promotion also led to frequent confrontations with customers over rules against take-home boxes and sharing. Former employees reported increased disrespect from patrons, with one manager even getting spat on. The clientele also shifted to a younger, rowdier crowd, displacing traditional older patrons.

After working through a busy Mother’s Day, Berke and many others discovered their locations had permanently closed the next morning. Although 500 locations remain open during the bankruptcy process, their future is uncertain.

Some patrons, like 23-year-old Michael Durrant, are disappointed by the closure. Durrant, who is "very broke," relied on the Endless Shrimp promotion for sustenance, once consuming 83 shrimp over several hours. “I am bummed that Red Lobster is going away,” Durrant said. “But I get it. There’s not really anything on the menu worth getting other than the Endless Shrimp.”