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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsRed Lobster bankruptcy driven by corporate owner forcing it to source its seafood?
Last edited Wed May 22, 2024, 10:38 AM - Edit history (1)
"Red Lobster CEO Jonathan Tibus wrote in court documents the Endless Shrimp offer was originally intended to be a limited-time promotion. However, in May 2023, Paul Kenny, Red Lobsters CEO at the time, made the decision to add the promotion to the chains menus permanently, priced at USD 20.00 (EUR 18.41), despite significant pushback from other members of the companys management team, Tibus said.
This decision created both operational and financial issues for the debtors
saddling the company with burdensome supply obligations, particularly with its equity sponsor: Thai Union, Tibus said.
Red Lobster is investigating the circumstances around these decisions, including whether Kennys decision-making process circumvented the companys normal supply chain and demand planning processes.
Red Lobsters supply process was strained by virtue of its relationship with Thai Union, according to Tibus. In addition to being the companys equity sponsor and 100 percent owner of Red Lobster Master Holdings GP, Thai Union is a primary supplier of seafood to Red Lobster."
Investing story that involves foreign ownership of a traditional American brand (Red Lobster is about the only place you can dine out on seafood in many locations in the midwest). We don't have a comparable restaurant in our area so it is now an hour plus drive to the nearest Red Lobster.
Got to wonder if the bankruptcy will be limited to Red Lobster alone or the debtors will attempt to pierce the corporate veil to Thai Union.
https://www.seafoodsource.com/news/business-finance/red-lobster-files-for-bankruptcy-says-it-s-investigating-thai-union-s-undue-influence-in-shrimp-purchasing-decisions
jimfields33
(18,375 posts)awful. So many genuine seafood restaurants.
getagrip_already
(17,035 posts)Now I'm in the northeast and own my own fishing boat, so I rarely eat in seafood restaraunts, but they are plentiful here.
Even so, there are red lobsters, so somebody must like them. More power to them.
This story is about corporate greed and corruption. Not food quality and eating preferences.
jimfields33
(18,375 posts)getagrip_already
(17,035 posts)With the shrimp deal and couldn't find a way out.
Then the typical cycle of unnecessary debt burden crushed their ability to operate efficiently.
Old story that usually has little to do with operations. Debt kills these companies. Debt that is used to bleed them dry by management.
jimfields33
(18,375 posts)But they have to build and build. Grrrr.
ProfessorGAC
(69,352 posts)They over expanded. RL has always been on the pricey side. The clientele is limited by finances.
There are 5 within a half-hour drive from our house. They needed five locations in a 40 mile circle?
debm55
(33,644 posts)SWBTATTReg
(23,943 posts)expensive (and it continues to get more expensive too).
We do have the shrimp farms over next door in Illinois, where they raise shrimp, and while not 100% sure, I'm sure that other seafood is farmed too, such as catfish, trout, etc. I seem to recall also, that some seafood comes from off the coast of Chile, and perhaps other places, if China hasn't fished them all out yet. I do recall that their Navy had to chase off Chinese fishing boats from invading their waters.
You are so very lucky, I would love having the ability to walk along the docks, perhaps get to buy some fish etc. for dinner, etc. Of course here, where I'm at, we have the Mississippi and Missouri (and the Meramec) rivers coming together, so the fish of choice is Catfish, perhaps trout, crappy, and maybe some sprinkling of other species. Not exactly the sort of meal one wants, but to give credit, the rivers are cleaned up quite a bit from, eh, 20-30 years ago.
hunter
(38,809 posts)Grown in ponds, of course, but close enough in taste and texture to the seafood sold in many restaurants.
atreides1
(16,314 posts)There are not a lot of genuine seafood restaurants in the Midwest. I found one located in Davenport, Iowa...Miss Mamie's Seafood and Steaks...and another located in Omaha, Nebraska...Plank's Seafood Provisions.
2 1/2 hour drive to Davenport for me and four hours to Omaha.
A lot of people look down their noses at Red Lobster, but my family has been enjoying them for three generations. My mom worked at high end seafood places in California and the Mississippi Gulf Coast as a waitress, and she has never been snobbish about going to Red Lobster (actually that is the last restaurant we went to together before she died, and we were planning a trip there when she died).
RubyRose
(223 posts)Crab Shack outside Des Moines that I really enjoyed occasionally.
Celerity
(46,154 posts)Corrected it.
Prairie Gates
(2,550 posts)Voltaire2
(14,608 posts)hunter
(38,809 posts)Then they sell the corpse.
Buyer beware.
This has little to do with "Endless Shrimp."
Nobody should ever click on a link like the one you originally posted. Thanks for fixing it.
exboyfil
(17,917 posts)I corrected it. I wasn't paying attention to the link.
I apologize.
Silent Type
(6,045 posts)people resort to loan sharks, payday loans, etc.
brush
(56,955 posts)permanently instead of on the intended "limited time" basis. No company could sustain that policy in a nation where so many people over eat for sport.
Seems a stupid CEO is the blame for Red Lobster's bankruptcy. IMO they should rake back whatever golden parachute package he got when he left the company he destroyed with his stupidity.
RubyRose
(223 posts)For their bad decisions while the workers lose their jobs. No parachutes for the workers that are laid off.
brush
(56,955 posts)Hassin Bin Sober
(26,667 posts)brush
(56,955 posts)2naSalit
(91,757 posts)Be going away before long anyway and has little to do with one person's bad management decisions.
Bonx
(2,154 posts)EleanorR
(2,430 posts)Worth reading the whole article as it also discusses changes in the structure of the fishing industry over the past few decades that have lead to changes in fish and seafood prices.
But the arc of Red Lobsters collapse extends much further back than Thai Union, and bends toward what writer Cory Doctorow has vividly described as enshittification.
The Endless Shrimp fiasco was a minor speed bump amid a series of poor business decisions by the companys numerous owners. Many of those mishaps look less like miscalculations and more like self-sabotage, intended to hollow out the restaurant chain to enrich the chains previous private equity owners, Golden Gate Capital.
Golden Gate crippled Red Lobster by selling off one of its most valuable assets, the real estate it owned, in whats known as a sale-leaseback, for $1.5 billion. With that sale, Golden Gate nearly made back its $2.1 billion purchase of Red Lobster, while turning the chain into a permanent leaser, adding a massive additional cost in the form of rent that was orders of magnitude bigger than the cost of Endless Shrimp. When commercial leases started going up, Red Lobster was highly exposed, but by then Golden Gate had already sold off its shares to Thai Union, which inherited all the debts Golden Gate stacked on the company.
https://prospect.org/economy/2024-05-22-raiding-red-lobster/
brush
(56,955 posts)and make their money then sell off the hollowed out company loaded with debt (rent plus), but the stupid "endless shrimp" policy sure didn't help. I mean we live in a nation where many are overweight and over eating is done for sport. That dumb CEO who made that policy permanent instead of for a limited time should have his golden parachute clawed back.
tavernier
(13,164 posts)that shrimp is one of tbe easiest and most versatile foods to prepare, and readily available in supermarkets all over the country? I net it right off the back of my boat and toss it in a boiling pot in my galley, so dont expect it it to taste quite like that, but some lemon and melted butter (and dill in the boil) will perk up a pot of frozen critters.
And you can tip yourself.
jmowreader
(51,292 posts)Very, very few people can eat a whole pound of shrimp in one sitting, so I don't think the Endless Shrimp is the problem here.
What I DO think is the problem, as it is with most LBOs, is the Endless Fees those guys charge the companies they've taken over. That's what killed Toys R Us, the endless fees. (That, and TRU is really a seasonal venture - most of their sales are made around Christmastime. I think what I woulda done if I was running TRU is set up a system like Spirit Halloween does - they only do brick-and-mortar for a couple months before the holiday and run an e-commerce site year-round. Maybe do store-within-a-store in, say, Target or Kohl's, like Sephora does.) It is extremely rare that a post-LBO company is successful.
WarGamer
(14,861 posts)Awaiting their fate.
If all the lobster tails were frozen in a box... it's less of a turn off for some people.