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.
The company’s current management and CEO are eager to pin its demise on Endless Shrimp, which totaled $11 million in losses. Upon filing for bankruptcy, they also launched an internal investigation into whether their majority shareholder Thai Union Group, which is also their main seafood supplier, might have pushed the shrimp promotion in order to boost their own sales at the cost of the retailer’s finances. This ownership structure between parties that are supposed to be on opposite sides of restaurant transactions does appear to be a clear conflict of interest.
But the arc of Red Lobster’s 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 company’s 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 chain’s 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 what’s 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/
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