On Could 20, after weeks of hypothesis and dozens of shuttered eating places throughout the nation, Crimson Lobster introduced that it might file for Chapter 11 chapter in an effort to save lots of the flailing chain. Because it closed areas, auctioned off its fryers and ovens, and confronted an more and more unsure future, one standard concept rapidly emerged: Crimson Lobster’s demise certainly have to be the results of all these countless shrimp promotions. On Twitter and elsewhere, the jokes had been equally countless.
In 2023, the chain introduced again its countless shrimp promotion — all-you-can-eat shrimp scampi for $19.99 — as a method to convey diners in and get them to spend on cocktails and appetizers. Whereas foot site visitors did enhance, that further spending didn’t pan out: the promo elevated site visitors by 4 p.c however resulted in an $11 million quarterly loss.
At first, “shrimp buffet bankrupting Crimson Lobster” does appear to be a believable concept. Shrimp is dear, and promoting limitless quantities of it for beneath $20 does appear to be a decidedly untenable enterprise mannequin, particularly when you think about the prices of shrimp at different eating institutions like high-end steakhouses and seafood eating places — proper now, typically a single shrimp cocktail prices as a lot as $30. It’s additionally simply very humorous to suppose that Crimson Lobster shot itself within the foot by promoting an excessive amount of shrimp at too low a price — an ideal metaphor for our period of hyper-consumption fueled by an more and more world financial system.
After all, it’s rather more difficult than that. Crimson Lobster has had a very tough final 10 years, perhaps even worse than the remainder of us; since 2021, the chain has had 5 totally different CEOs. In 2014, its mum or dad firm Darden offered Crimson Lobster to a personal fairness agency referred to as Golden Gate Capital for $2.1 billion. That sale helped Darden repay $100 billion in debt and fueled important development for its different eating places, like Olive Backyard, within the ensuing years. Even when COVID hit in 2020, the corporate nonetheless managed to preserve optimistic money move as different eating places floundered. Crimson Lobster, although, continued to battle.
However once more, it wasn’t due to the shrimp. Following the sale of Crimson Lobster to Golden Gate, the chain’s actual property property had been additionally offered off, which meant that the eating places now needed to pay lease on these areas to their mum or dad firm. As such, the corporate was caught in leases for underperforming eating places that it couldn’t afford. As with different non-public fairness forays into industries like retail and media, Crimson Lobster’s new non-public fairness proprietor saddled it with tons of debt.
In August of 2020, Golden Gate Capital offered Crimson Lobster to Thai Union, a Thailand-based seafood firm that owns plenty of seafood manufacturers, together with canned tuna model Hen of the Sea. As soon as Thai Union took over, Crimson Lobster insiders say that the corporate engaged in excessive cost-cutting measures and didn’t place sufficient emphasis on innovation, particularly as fast-casual eating places like Cava and Chipotle took over an more and more massive portion of the informal eating market. Simply 4 years later, in January 2024, Thai Union was able to get out of the restaurant enterprise, citing “sustained business headwinds, greater rates of interest and rising materials and labor prices.”
And so after billions of {dollars} in losses, too many govt shuffles to depend, and three totally different company possession teams up to now decade, why are we nonetheless making an attempt to insist that Crimson Lobster’s failure is the shrimp’s fault? It’s clearly a lot funnier, and simpler, to consider that one thing as foolish as an countless shrimp promotion might actually spell the tip of a restaurant that’s been round since 1968.
The fact, although, is rather more insidious. Whereas most diners have fond reminiscences of gorging on countless shrimp — my youthful brother and his highschool soccer buddies as soon as (briefly) closed down an East Texas location after consuming 377 shrimp — and snacking on Cheddar Bay biscuits, Crimson Lobster’s possession doesn’t doesn’t give a whit about your fond reminiscences there. It additionally doesn’t appear to care a lot concerning the a whole lot of people that discovered themselves with no job when the eating places all of a sudden closed their doorways. The chain’s present possession cares solely about cash and stemming the losses brought on by its personal poor decision-making. Placing the deal with the shrimp quietly absolves those that had been truly concerned in its downfall.
That the countless shrimp might’ve spelled the tip for Crimson Lobster is definitely novel, however the concept of personal fairness vultures swooping in to siphon each final drop of worth from a beloved establishment or model earlier than it inevitably dies? Effectively, that’s a story as outdated as time.
