The lawsuit says Endless Srhimp was part of a scheme by seafood supplier Thai Union. | Photo: Shutterstock
Red Lobster’s Ultimate Endless Shrimp debacle is something the chain would probably like to forget about at this point. But it just keeps resurfacing.
Back in the summer of 2023, the $20, all-you-can-eat offering sparked an $11 million loss for the seafood chain as inflation-weary customers filled up on cheap, unlimited shrimp. Today, the deal is widely viewed as the final straw in Red Lobster’s descent into Chapter 11 bankruptcy, and one of the worst restaurant marketing blunders in recent memory.
Now Endless Shrimp is back in the spotlight once again after a group of Red Lobster creditors alleged that the deal was more than an honest mistake.
A lawsuit filed in Orange County, Florida, circuit court in May claims that former Red Lobster stakeholder and longtime seafood supplier Thai Union Group used Endless Shrimp as part of a scheme to get the struggling Red Lobster to buy more shrimp from Thai Union.
In addition to Thai Union, a number of affiliated companies and officials are named as defendants, including Thai Union CEO Thiraphong Chansiri and Paul Kenny, interim CEO of Red Lobster from 2022 to 2023.
According to the lawsuit, after taking a de facto majority stake in the chain in 2020, Bangkok-based Thai Union took control of Red Lobster’s board, pushed out management, and blocked other shrimp vendors, all in an effort to direct more of Red Lobster’s shrimp business to itself.
Ultimate Endless Shrimp was allegedly the centerpiece of this strategy. According to the lawsuit, the deal was engineered by Thai Union and Kenny to maximize shrimp orders from Red Lobster at inflated prices. The deal had a low price point, was marketed aggressively in restaurants, and, unlike past versions of the promotion, was available every day. This came despite objections from Red Lobster employees who warned management that it would not be profitable, the lawsuit says.
In comments at the time, Thai Union said the “bold proposition” was intended to improve traffic as consumers recoiled from menu price hikes.
“The profitability will be decreasing a bit because we are decreasing the overall check,” CFO Ludovic Garnier said on an earnings call in August of 2023, over a month after Ultimate Endless Shrimp debuted. “But we do expect the situation to improve overall.”
The plan backfired, as the cost of the shrimp far outweighed the 4% traffic boost it generated for Red Lobster that quarter.
And, according to the lawsuit, it caused problems beyond just those immediate losses. Employee turnover spiked because of chaos and shrimp shortages in restaurants. The deal also drove in customers who would have normally visited at other times in the year, making later seasonal offers less effective. According to the suit, Ultimate Endless Shrimp would ultimately cost Red Lobster “tens of millions of dollars.”
It cost Thai Union too. In January 2024, a few months after Endless Shrimp imploded, the company announced plans to divest from Red Lobster, recording a non-cash impairment cost of around $530 million.
According to the lawsuit, one month later, Thai Union sent Red Lobster a letter claiming damages for “supposed overproduction of shrimp at Red Lobster’s direction.” The company said it was stuck with $27 million in excess shrimp in part due Endless Shrimp orders.
Neither Red Lobster or Thai Union responded to requests for comment this week.
The lawsuit is not the first time allegations of shrimp self-dealing have been raised against Thai Union. Similar claims were made in bankruptcy documents by former CEO Jonathan Tibus, who was appointed to help guide Red Lobster through its restructuring back in May of 2024.
“Red Lobster’s supply process was strained by virtue of its relationship with Thai Union,” Tibus said in the filing, adding that Thai Union “exercised an outsized influence on the company’s shrimp purchasing.”
In a statement at the time, Thai Union called Tibus’ allegations “meritless.”
“Thai Union has been a supplier to Red Lobster for more than 30 years, and we intend for that relationship to continue,” the company said in May 2024. “We are aware of the meritless allegations in the Bankruptcy Court pleadings and look forward to a full representation of the facts.”
To be clear, Endless Shrimp was one of many factors that led to Red Lobster’s bankruptcy filing. The chain had $300 million in debt and numerous unprofitable locations. Customers were visiting its restaurants less frequently while costs for food and labor were increasing, which hurt profits. The chain’s bottom line was further burdened by expensive leases stemming from a 2014 sale-leaseback under then-owner Golden Gate Capital. It had already closed about 100 restaurants, and would close more in the coming months and years.
Endless Shrimp, as current CEO Damola Adamolekun said later, was just “the final nail in the coffin.”
Proving that Thai Union purposefully steered Red Lobster to buy more shrimp could be difficult, said Joseph Sabbagh, president of seafood consultant Sax Maritime Associates.
Shrimp prices were low at the time, he said, and Red Lobster has historically had strict specifications for its shrimp. That could have given it justification to buy more shrimp from Thai Union, a trusted supplier with close ties to the chain.
But, “if [Red Lobster] was purposely paying Thai Union more money than it would [to] buy from other established suppliers, there’s a big problem,” he said.
Thai Union is likely to argue that it was acting in Red Lobster’s best interests, despite the appearances, said Brian Marks, an economics professor at the University of New Haven who specializes in bankruptcies. But, he said, the lawsuit makes a strong case for self-dealing.
“If the allegations are true, as the plaintiffs are outlining, the evidence is extremely strong to withstand the defendants’ argument that they acted in good faith,” he said.
The decision may soon be in the hands of a Florida jury, per the lawsuit’s request. The court issued summons to Thai Union and several other defendants on Wednesday, giving them 20 days to respond, court records show. A hearing had not yet been scheduled.
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