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How $20 endless shrimp bankrupted American staple Red Lobster

The once-iconic American chain reported more than $1 billion in debt in its bankruptcy filing

a restaurant called red lobster serves fresh fish and live lobsters
Almost 100 out of 551 Red Lobster outlets have closed so far in the United States
MICHAEL NAGLE/GETTY
Keiran Southern
The Times

A 65-year-old mortgage broker from Inglewood who has chosen to eat at the bar, EJ Johnson doesn’t have high hopes for Red Lobster. “It’s close, that’s the only reason we’re here,” he says, sitting with his partner, Sandy, who’s giving the menu a once-over.

Johnson is already complaining about the Long Island iced tea as Sandy attempts to order her meal — calamari, lobster flatbread, jumbo coconut shrimp and stuffed mushrooms. Her face falls when she’s told the restaurant in Inglewood, Los Angeles, has run out of everything she wants. She won’t be the only one tonight.

Though the dining room is busy, there’s a gloom in the air. The American chain filed for bankruptcy this week. Almost 100 outlets have closed so far but, for now, Inglewood is spared.

That doesn’t seem to lighten the mood in the dining room where, as Life is a Highway by Rascal Flatts plays in the background, the live lobsters in the tank know they, perhaps like the chain itself, are on borrowed time.

Red Lobster reported more than $1 billion in debt in its bankruptcy filing, which pinned blame on a 30 per cent drop in customers, unreasonable rent and a $20 endless shrimp promotion that contributed to an $11 million loss in a single quarter. When its chief executive, Jonathan Tibus, joined the company earlier this year he said it had become “clear that Red Lobster’s performance was deteriorating and had been doing so for several years”.

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The bleak outlook is a far cry from Red Lobster’s 1990s and 2000s heyday, when the chain was beloved for offering families affordable, high-quality seafood.

Founded in Florida in 1968 and modelled on Bar Harbor, a popular tourist town on Maine’s Atlantic coast, Red Lobster was once a go-to destination.

Some Red Lobster restaurants shut down shortly after the bankruptcy filing
Some Red Lobster restaurants shut down shortly after the bankruptcy filing
JUSTIN SULLIVAN/GETTY IMAGES

Even Beyoncé once revealed herself as a fan. In her single Formation from the album Lemonade, the singer offers a person, seemingly as a reward for sexual prowess, a meal out. “When he f*** me good,” she sings, “I take his a** to Red Lobster”.

Eight years later, some people are taking bits of the chain home with them. The bankruptcy declaration prompted a fire sale of equipment from the restaurants that were forced to close. There were freezers, ovens and even lobster tanks, with liquidators, as they often tend to do, reporting soaring demand.

At the Inglewood branch, though, they had already been letting equipment go. Even the register had given up, suffering a computer glitch leaving many with extended waiting times for the limited offerings. The fairly essential crab mallets were in short supply, meaning diners had to pull food apart with their hands, with one unfortunate diner sporting a piece of crab in his hair.

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For now, trading on what little goodwill is left among its customers, some 540-plus restaurants will stay open. In Inglewood, as servers shuffle between tables under paintings of Maine harbours and sing Happy Birthday to a five-year-old, at least one couple has hope.

Those restaurants that are still open are facing supply issues
Those restaurants that are still open are facing supply issues
PAULO FRIDMAN/GETTY

Greg and Patty Behr, retired contractors, are on their maiden visit to Red Lobster. Upon hearing the bankruptcy news, they came to use Christmas gift cards before it was too late.

“I had a different idea of Red Lobster before I came, I thought it was like Sizzler,” Patty said, referring the pioneering steakhouse chain that filed for bankruptcy during the pandemic. “But when we got here I was pleasantly surprised by how nice it is.”

Startled by the sight of live lobsters frolicking in the tank ready to be cooked, Patty sent Greg back outside to make sure they were in the correct restaurant. They were, in fact, at Red Lobster.

That didn’t stop Patty feasting on lobster tail, along with scallops and both deep-fried and grilled shrimp, while Greg was amazed by his $28 steak and lobster.

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Another table nearby was not so lucky, with a family demanding the manager to complain about a lack of each thing they tried to order.

Sandy settled on a last-choice lobster dip at the bar — but still went hungry. “She hated everything,” Johnson said. “She sent everything back.”

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