Red Lobster Is Hemorrhaging Millions Because of Endless Shrimp | WSJ What Went Wrong

Red Lobster is in trouble. The seafood chain recently known for its endless shrimp special reported $11 million in losses in the third quarter, and its parent company Thai Union Group has announced it will sell its majority stake.

WSJ explains what went wrong with the fast casual dining business and looks at what could come next for Red Lobster.

Chapters:
0:00 Red Lobster’s troubles
0:38 The rise
1:47 Turning point
2:52 The downfall
5:32 What's next?

What Went Wrong explores the challenging conditions and decisions that led to a company's downturn.

#RedLobster #Food #WSJ

[GotKimchi]

Endless shrimp is just an excuse. Private equity went in bought it, and is just loading the company up with debt to sell the profitable parts, so they can then leave and screw everyone else

[Dallas]

I hear the phrase “private equity” and I immediately know what went wrong.

[gund]

WSJ should spend time explaining what private equity did.
Sell assets and lease them back to red lobster?
Wouldn’t this increase operating cost ?
How much did private equity make on this ?
And they are blaming on wages, labor shortages, interest rates ?
Everyone except private equity?

[actionjack]

"Private Equity"= loot, steal, destroy repeat

[vincentorlando]

I think before Thai Union took majority ownership, the business was run into the ground by the previous private equity owner. WSJ failed to cover this aspect of Red Lobster decline. When you see a Private Equity firm take over business, break out real estate owned, sell it and provide lease backs to business, its a transaction to remove profits and cash. The business was probably purchased with lots of debt added by private equity firm. So high rents, high debt really sunk this company. The endless shrimp worked for years before without

[Gaheku]

Notice how they try to blame higher wages first before going to the real issue: leasing their properties with much higher interest rates. Make no mistake if wages never changed they would still be in trouble. Another company bites the dust.

[phillipjones]

Using endless shrimp as a excuse is embarrassing

[itsgottabechef]

Red Lobster was one of my first jobs and the employees could not stand every time endless shrimp rolled around! It was a nightmare each shift because ppl would walk in with coolers and plastic bags in their purses to dump the shrimp. Just a mess

[barcelonachair]

Endless shrimp for the American consumer? What could go wrong? Even the sea only has so much.

[jdkgcp]

Anyone who's ever done the "endless shrimp" figured that scam out pretty quick...as they space the timing out longer and longer and longer in-between asking if you want more shrimp.

Only bored idiots are going to sit in a Red Lobster for like 4-5 hours just for some dumb shrimp. Unfortunately for Red Lobster it turns out there's TONS of bored idiots out there.

[benjaminbradley]

I used to love red lobster so much but the seafood quality has dramatically dropped since I was a kid and the prices have only gone up

[carolr]

It seems every time I hear private equity buys out a company, they sell off the pieces and sort of raid the company and then it goes bankrupt. Has there ever been a private equity deal that a company benefited from long term?

[HiepTLe]

That's hilarious. Why not just end the fiasco? Must be deeper than just endless shrimp...

[beatznatwor]

The red lobsters I’ve been to recently are always so empty feeling compared to 10 years ago

[boydr]

Problem is the quality kept going down but prices kept going up.

[firechase]

Their biggest problem was when Darden sold it to private equity they kept the quality the same but jacked up the prices. Sorry red lobster but your seafood doesn’t warrant the prices you’re charging.

[janettepenningtonclarkhs]

They used to be a great place to eat. Then things like microwaved bowls of soup came along and portion size shrunk to half and the endless shrimp was a 30 minute wait to get 3 more. They lost their edge and feel of a nice place to eat. Numerous times I personally sent polite letters asking why their service was so bad. 45 minute to an hour wait for your food once seated was way to long. Especially after waiting an hour for a table. I walked out several times without even getting an order placed. BAD MANAGEMENT means poor employees. Once a manager assured me to sit back down and he'd put his best waitstaff on me and my husband. 45 more minutes later we left without ordering. You get what you deserve.

[LuciFeric]

Sir, we're losing money on the shrimp!

We'll make it up in volume!

[cityofabscissae]

Imagine having restaurants that you own, then a private equity firm comes along and sells them for some quick cash, and you have to pay leases on all your properties. That's a bad deal! No wonder they're hurting. Endless shrimp can only do so much damage.

[jennetal.]

I remember my Dad and brother competing on who could stack the most empty plates back in 1991