Red Lobster’s ‘All-You-Can-Eat’ Shrimp Deal Drove Them to Bankruptcy

By: Beth Moreton | Published: May 22, 2024

Red Lobster was once one of the most popular seafood restaurants in the US, most famously known for its 2003 “Endless Crab” promotion.

After that went wrong, the seafood chain failed to learn from its mistake. Twenty years later, it ran an “All-You-Can-Eat Shrimp” campaign, which lost them money and drove them towards bankruptcy.

Red Lobster Is Shutting Restaurants

After its “All-You-Can-Eat Shrimp” campaign went wrong and caused Red Lobster to lose money after several unfortunate events, it has decided to close around 48 out of its 650 restaurants.

The outside of a Red Lobster restaurant. The front of the building features an image of a red lobster. Outside the building are three flags, including the US one.

Source: Mike Mozart/Wikimedia Commons

It is currently auctioning off the furniture and various items within the closing locations, which will result in thousands of jobs lost. Other Red Lobster locations are waiting to see what will become of them.

Red Lobster Might Be Filing for Bankruptcy

Due to the company’s financial woes, it has been reported since April 2024 that Red Lobster is considering filing for bankruptcy to try to reorganize finances and operations.

Source: Melinda Gimpel/Unsplash

While a formal decision is yet to be made, or at least announced, seafood fans might want to go and take advantage of the restaurant before it is too late.

Red Lobster Is Looking for a Buyer

As it is currently unknown whether or not Red Lobster will file for bankruptcy, the company is looking for a potential buyer to prevent this from happening.

The outside of a Red Lobster restaurant. A red lobster is on the front of the building, and three flags, including the US flag, are outside it. Some disabled parking spaces are directly opposite it.

Source: Sf46/Wikimedia Commons

It is currently uncertain what Red Lobster’s future will look like; however, many fans of seafood are hoping it won’t include a permanent closure.

Red Lobster’s ”Endless Crab” Campaign

Red Lobster first opened in the 1960s because they knew people loved seafood. Decades later, the restaurant chain decided to launch an “Endless Crab” campaign in 2003.

A plate of crab legs, melted butter, and lemon wedges from Red Lobster.

Source: @jadednature/X

The campaign enabled customers to eat as much crab as they wanted for a set price. While they expected customers to maybe eat two portions, they were eating much more than that, to the point where the company lost $3.3 million in seven weeks.

Red Lobster’s ”All-You-Can-Eat Shrimp” Campaign

Clearly unable to learn from its mistakes, 20 years later, Red Lobster decided to run a similar campaign, only this time with shrimp that cost just $20.

Plates of shrimp, broccoli, and a pint of beer from Red Lobster.

Source: @redlobster/X

Instead of making it a limited-time offer, Red Lobster decided to make it a permanent feature on its menu. Due to its popularity, Thai Union, Red Lobster’s major shareholder, lost $11 million.

Thai Union Has Left Red Lobster

After several years as a major shareholder in Red Lobster, Thai Union has decided to withdraw from the partnership, which only worsens its financial situation.

The outside of a Red Lobster restaurant. The car park is empty, and the building is an image of a red lobster.

Source: Bonnachoven/Wikimedia Commons

The company has received a $530M loss on its investment. The endless shrimp isn’t the only one to blame, as the COVID-19 pandemic also had a negative impact on Red Lobster and other restaurants from all over the world.

40% Increase in Customer Traffic

It was previously thought that the shrimp offer would help Red Lobster’s sales, especially as it exceeded its predicted 20% increase in customer traffic by more than double.

A blue neon arrow going up against a black background.

Source: Samuel Regan-Asante/Unsplash

However, despite this increase, customers were eating so much shrimp that it extended the wait times for others. Due to how long the wait times were, these customers decided to go elsewhere.

The Pandemic and Rising Wages

Several issues are at play here, including the COVID-19 pandemic. This forced restaurants to close and, in some cases, run at a limited capacity, significantly affecting profits and revenue.

Two post-it notes on a window. One says, “Sorry, we are closed,” and the other says “COVID-19.”

Source: Anastasiia Chepinska/Unsplash

Another issue is the rising cost of wages. Due to the cost of living, this has caused inflation to rise, which also causes a rise in wages to try and match this. With the cost of everything else going up, many companies have reported struggling to keep up with these rises.

A Low Price for Pricey Items

Red Lobster had thought the low price would draw in more customers. Especially as the cost of everything is rising, a cheap shrimp deal would always get customers in its restaurants to take advantage of it.

Plates of shrimp and crab legs with some drinks from Red Lobster.

Source: @hashtag_gracy/X

But shrimp and seafood are hardly cheap menu items. Charging $20 for as much shrimp as anyone can eat was always going to be a huge gamble, with a chance it would have caused them to operate at a loss, which it did.

108 Shrimp in 4 Hours

One woman has even bragged that she could eat 108 shrimp in just over 4 hours. It was people staying this length of time and consuming this amount of food that caused Red Lobster to go into further financial issues.

A plate of shrimp with a dish of tomato sauce and a wedge of lemon.

Source: @redlobster/X

Even when Red Lobster raised the price of the shrimp from $20 to $27, customers continued to take advantage of the offer, to the point that the company may have been better off by pulling the offer altogether.

Red Lobster Customers Are Seeing the Funny Side of It

Instead of being sad that their favorite seafood restaurant might be closing, Red Lobster’s customers have taken to social media to share the funny side of the situation.

A post on X that says, “Only in America could we eat Red Lobster into bankruptcy.” A GIF of Rebel Wilson is underneath it.

Source: @teatime75/X

One X, formerly Twitter, user posted, “Only in America could we eat Red Lobster into bankruptcy,” along with a gif of Rebel Wilson doing a fist pump in the air. Others responded, saying they couldn’t help but laugh. Despite decades of being in business, Red Lobster hasn’t learned that Americans will always take full advantage of an all-you-can-eat offer.