'Endless Shrimp' just one misstep for Red Lobster as it eyes bankruptcy protection
CTV
While it's unclear what these closures might mean for the 27 restaurants in Canada, Red Lobster is expected to file for bankruptcy protection in the U.S. this month.
Red Lobster's "Endless Shrimp" and "Endless Crab Legs" promotions are being blamed, in part, for its financial challenges as the restaurant chain shutters dozens of U.S. locations. While it’s unclear what these closures might mean for the 27 restaurants in Canada, Red Lobster is expected to file for bankruptcy protection in the U.S. this month.
To get more diners into its restaurants, Red Lobster made its “Endless Shrimp” and "Endless Crab Legs" promotions permanent, but the company didn’t expect how much seafood its customers would eat.
"That's led to millions of dollars in losses," says Marvin Ryder, a business professor at McMaster University in Hamilton, Ont. "They made a terrible assumption that you and I would only go back twice for endless shrimp, and instead people went multiple times."
While the promotions are partially to blame for steep quarterly losses, they are part of a string of challenges that go back years. The company has gone through four CEOs in five years.
"When you have a different CEO with a different vision of where the company should go, that leads to a lot of jerking around," Ryder says.
Like many restaurants, Red Lobster is also struggling with high interest rates, inflation and a younger generation it has not had a great deal of success connecting with.
CTV News spoke to several people outside a Red Lobster in downtown Toronto, many of whom had fond memories of visiting the restaurant as a child, but have not been back in years.
