Source: Fortune
Summary
Red Lobster’s “Ultimate Endless Shrimp” promotion, which was made permanent in 2023, is alleged to have been a ploy by Thai Union Group, the chain’s former majority shareholder, to squeeze profits from the restaurant. The promotion led to significant losses, with Red Lobster reporting an $11 million loss in a single quarter. Shareholders are now suing Thai Union, alleging that the company exploited its controlling stake and pressured Red Lobster into entering into unfavorable contracts. The lawsuit seeks to dissolve $32 million in transactions and demands a jury trial to determine damages.
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The strategy enters a familiar phase.
Red Lobster’s “Ultimate Endless Shrimp” promotion was a disaster, with the chain losing $11 million in a single quarter. Thai Union Group, the chain’s former majority shareholder, is alleged to have pushed for the promotion to be made permanent, despite its unprofitability. The lawsuit claims that Thai Union exploited its controlling stake to benefit itself, rather than Red Lobster. The promotion was eventually pulled, but not before it contributed to Red Lobster’s financial decline.
The numbers tell a story of a company that was squeezed dry by its majority shareholder.
Author: Evan Null
