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IF RED LOBSTER’S BUTTER-BATHED SHIP IS SINKING, REMEMBER THE SHRIMP

The casual sit-down seafood restaurant is shuttering restaurants and could be on
the verge of bankruptcy.

By Emily Heil
May 17, 2024 at 9:52 a.m. EDT

A closed Red Lobster in Torrance, Calif. (Patrick T. Fallon/AFP/Getty Images)

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They say the shrimp did it.

Locations of Red Lobster all over the country have been closing down, with
dozens shuttering their doors this week. The company is reportedly teetering on
bankruptcy, and some analysts say the money the iconic chain lost on its
“endless shrimp” deal — where diners unexpectedly gobbled up enough to put the
company millions of dollars in the hole — was its death blow.



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Were the shrimp simply too irresistible? Or were diners’ appetites (for
shellfish, yes, but also for a dazzling bargain) just too cavernous?

On a night this week, when I arrive at a still-open location in suburban
Suitland, Md., the shrimp is not all-you-could-eat. Still, it is plentiful. The
scampi swim in a little ceramic bathtub of pungent parsley-flecked butter and
garlic. The butterflied, breadcrumb-coated fried variety are crisp, ready to be
dunked by the tail in ramekins of horseradish-spiked cocktail sauce. For $17,
you can order two styles: They also come flavored with coconut flakes or Mexican
street corn, “dragon” spiced, skewered and grilled or blanketed in Alfredo sauce
atop linguine. Sure, the little guys might not be ocean-fresh (they were
probably frozen, like much of the seafood we eat), but they are … pretty good,
or at least the crowd seems to think so.

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Get the recipe: Red Lobster-Style Cheddar Biscuits

With the smell of melted butter and the sound of Britney Spears’s coo in the
air, I find it hard to believe that this seafood party could end at any time,
and that this location, with its view of full parking lots and Chevrolet
dealerships stretching in two directions, could be the scene of what has played
out at other locations around the country, with apologetic notes taped to the
door and workers loading out furniture and equipment for auction. Here, barely
three miles east of Washington, D.C., the margaritas are still
beach-bucket-sized and those pillowy-salty cult-favorite Cheddar Bay Biscuits
are flowing (a winking server promises an extra delivery to make up for a long
wait).




There’s a couple on a date that seems to be going well; after the appetizers
come, she moves over to sit next to him on the booth bench; his arm snakes
around her back. A table of women have gathered for ladies’ night dinner, and
they order a round of many-hued margaritas. There’s no way to clink these
glasses in a toast — you have to lean over them to slurp from a straw, which
they do. The bar is full.

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It’s easy to see how the lure of endless shrimp, though, took a pinch out of Red
Lobster’s bottom line. On TikTok, people shared their epic evenings devouring
hundreds of shrimp for only $20, after the chain made what had been a
limited-time deal a permanent fixture. On Reddit, people gamed out how to get
the most out of the special. They boasted of body counts in the hundreds, of
getting shooed out by fed-up servers delivering successive plates of seafood
with ever-louder thunks of platters.

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As the 1990s ads for the chain used to say, “Wow, that’s a lot of shrimp!”



To Michael Kaufman, a former restaurant chain executive and Harvard Business
School professor, the run on the endless shrimp offer was just another burden
for the chain, which was already facing steep challenges, from rising food and
labor costs to lower traffic from consumers feeling pinched. “It was the straw
that broke the camel’s back,” he said.

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The company had been bitten in the past by an all-you-can-eat special gone awry.
In 2003, it advertised a special on crab legs, and the resulting swarm lost the
company so much money that it prompted the departure of then-CEO Edna Morris.

It’s not quite time to write Red Lobster’s obituary — experts say the brand
could very well emerge from this round of downsizing and even a bankruptcy with
a significant national presence intact. And so we come not to bury the Lobster,
but to remember it.

Which would of course include those TV spots, many diners’ introduction to the
chain. The commercials were pageants of lemon wedges being squeezed and
splashing butter — so, so much butter. Many starred wholesome families digging
into seafood feasts, but some of the most memorable were downright seductive,
like this one from 1990: The restaurant’s signature jingle (“Red Lobster for the
seafood lover in youuuuu”) played as a smoldering torch song while the shrimp’s
butter bath burbled. “Scaaampi,” the narrator practically purrs.

The ads were so distinctive that they were even spoofed in a 2017 short horror
film starring “Gilded Age” stars Carrie Coon and Morgan Spector (in the 2022
period drama they play husband and wife, but in this she’s a customer trapped in
a 1990s Red Lobster commercial and he’s the menacing waiter). The film seems to
have disappeared from streaming platforms, alas, but in bootlegged versions, you
can see that the means of violence includes melted butter.




Throughout the decades, the chain has undergone various reinventions. In 2007,
it dropped the tagline “For the seafood lover in you” in favor of “Come see
what’s fresh today,” as part of a shift to emphasize its fresh-fish offerings
instead of the fried dishes it had long been known for. In 2011, it completed a
redesign that invoked the nautical aesthetic of Bar Harbor, Maine (think signal
flags, Adirondack chairs and maritime art), a move meant to echo its
highlighting of the “flavors of America.” In 2018, it brought out smaller
seafood “tasting plates” and dishes with global flavors.

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Of late, Red Lobster has indulged in some cringey youth-oriented marketing,
including attempting in a TV ad to capitalize on the viral Tik Tok audio clip of
gospel singer Shirley Caesar in which the singer praises “beans, greens,
tomatoes, potatoes, you name it!” The chain hired her to sing, in a similar
cadence, the makeup of its lobster-and-shrimp promotion: “tails, shrimp,
waiters, potatoes …” And inexplicably, in April, it introduced a playlist of
AI-generated songs celebrating Cheddar Bay Biscuits (sample track: “Cheddar Bay
Bouncin II”).

For all that effort, in recent years, the chain seemed to whiff on a gift from
the marketing gods. No less a pop goddess than Beyoncé mentioned the chain in
her hit 2016 single, “Formation,” the lyrics of which suggested that if her
lover, ahem, pleased Queen Bey, he would be rewarded with a visit to Red
Lobster. It took the brand a full eight hours (a lifetime in social media time)
to respond. And when it did, the engagement it offered was, in the collective
judgment of the internet, pretty lame.

Behind the scenes, management moves and market forces are what put it in its
tenuous spot, experts say. The chain was founded in Florida in 1968 by
restaurant giant Bill Darden and enjoyed a long stretch of growth, first under
the umbrella of General Mills, which spun the chain off in 1995 under the new
Darden Restaurants company. For many people in landlocked towns, Red Lobster was
an introduction to the exotic world of lobster tails, snow crab legs and, of
course, shrimp.



But as its sister restaurant, the Olive Garden, soared, Red Lobster faltered,
and the restaurant group sold the seafood chain in 2014 to private equity firm
Golden Gate Capital for $2.1 billion. Its supplier, Thai Union Group, eventually
became its biggest shareholder. That structure probably encouraged executives to
make all-you-can-eat shrimp a permanent menu item, observers say, but it could
also have created broader problems. “I’d be concerned that if you are a
restaurant chain that is owned by a supplier, you may be constrained in your
ability to get competitive pricing,” Kaufman says.

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And Stephen Zagor, a restaurant consultant and professor at Columbia Business
School, says the ownership might not be as committed to the core of what Red
Lobster does. “They’re not doing it to be in the restaurant business,” he says,
“They’re in it to make money.”

He says that as Red Lobster raised its menu prices, it became less of a deal for
diners, who have plenty of other choices, including the proliferating range of
fast-casual spots: “They became too much a part of American wallpaper.”

And the problem might not be just Red Lobster’s but that of all casual sit-down
restaurants. Menu prices in the category are up 20 percent since 2021, in the
face of higher costs on everything from labor to napkins, and customers are
starting to balk, according to data from researcher Technomic.

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Some are offering deals to lure them back in — such as Red Lobster’s endless
shrimp, which turned out to be the miscalculation on top of the cherry. The
company underestimated not just how much people would eat, it overestimated how
much other business it would drive.

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“Those calculations,” Kaufman says, “just didn’t square with what the consumer
did.”

I can relate. In Suitland, the meal has ended and a server delivers containers
for our leftovers. The shrimp from my seafood feast is long gone and so are the
lobster tails. And I decide not to toss in the tangle of crab legs I couldn’t
polish off.

But those cheesy, addictive biscuits go directly into the box. After all, I
don’t know when I might have them again.

Get the recipe: Red-Lobster Style Cheddar Biscuits


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