Red Lobster's new CEO Damola Adamolekun says $20 unlimited shrimp offerings have caused stress and “havoc” for employees, contributing to the restaurant's bankruptcy filing. I admitted that I caused it.
Mr. Adamolekun, 35, was selected to take over the struggling Orlando-based chain in August after it suddenly closed 100 stores and filed for Chapter 11 protection. .
“Endless Shrimp” promotion First released in 2004 Initially it only lasted a week, but a sea of mayhem ensued after the company made it permanent on the menu in May 2023. Management underestimated how popular it would become, and the company lost an estimated $20 million that year.
“It's stressful in the kitchen. It's stressful for the servers. It's stressful for the hosts.” Adamolekun told CNN. “People can't get a table. It creates a lot of operational disruption.”
The Orlando-based company filed for bankruptcy protection in May 2024.
According to the bankruptcy filing, then-CEO Jonathan Tibbs permanently made the Endless Shrimp promotion available to customers “despite significant opposition from other members of the company's management team.” He blamed former CEO Paul Kenny for this.
The filing added that the chain experienced a significant shortage of shrimp, causing problems with “the company's normal supply chain and demand planning processes.”
In August, a U.S. bankruptcy judge approved the company's reorganization plan, allowing it to emerge from Chapter 11 bankruptcy protection and be sold to a group of lenders led by asset manager Fortress.
Red Lobster had 650 stores until its largest shareholder, Thai Union, wrote down $530 million in the fourth quarter of 2023 due to endless shrimp promotions. During the bankruptcy process, more than 50 stores had their equipment auctioned off as part of the liquidation process.
Despite major financial problems, Red Lobster still maintains its three-story Times Square store, which costs $2.2 million annually in rent.
Now only 545 the place remains In the US.
Adamolekun, who previously served as CEO of PF Chang, is hopeful that the company's long-term investment plan, which includes more than $60 million in new financing commitments, will continue to progress.
“Red Lobster has a great future ahead of us, and I can't wait to start planning with our more than 30,000 team members across the U.S. and Canada,” Adamolekun said in September.
Red Lobster has had five CEOs since 2021, and has had multiple CEOs over its 56-year history, including a sale in 2014 to General Mills, Darden Restaurants, and a private equity firm. There was a change of ownership.
Adamolekun said endless shrimp could return to the menu in the future, but only if it doesn't cause the same problems.
“I don't want to say never, but it certainly won't be that way,” he said. “We're not going to lose money that way and do it in an uncontrolled way.”
