Red Lobster’s risky return: The ‘endless shrimp’ deal that tanked the chain is back

Red Lobster is on a mission to achieve what its new leader has said will be “the greatest comeback in the history of the restaurant industry.”

Apparently, that includes bringing back “endless shrimp” — an offering that proved so popular, and so costly, when it was a permanent fixture on Red Lobster’s menu that it helped tip the seafood chain into bankruptcy in 2024.

Red Lobster is looking to launch a limited-time version of the all-you-can-eat deal, with the promotion set to kick in as soon as this month, according to people with knowledge of the plan, who asked not to be identified because they weren’t authorized to speak publicly about the situation.

A representative for Red Lobster said the chain doesn’t have “anything to announce at this time,” adding that it is always paying attention to what guests are asking for.

“Endless shrimp has long been a guest favorite and one of our most popular promotions,” the representative said. “We appreciate the enthusiasm and encourage guests to keep sharing their feedback with us.”

Red Lobster would be reviving the old favorite as part of efforts to lure customers and fuel growth at a time when diners face a plethora of choices, and the brand has lost some luster. But the temporary nature of the current deal is a crucial distinction from the last time it was on offer.

Insiders point to the 2023 decision by Red Lobster’s previous management to make endless shrimp available year-round as a big reason for the chain’s collapse. Before that, going back some two decades, it was a success as a strictly limited-time event.

As an everyday item, endless shrimp caused Red Lobster to lose $11 million in a single quarter and contributed to a cash crunch. The restructuring expert who took over as chief executive before and during its bankruptcy said in court filings that the decision “harmed” Red Lobster by costing millions and creating “burdensome supply obligations” as it churned through its inventories of shrimp.

Other factors contributing to the bankruptcy included long-term, costly leases it was saddled with as part of a real estate deal in 2014 and a series of bad decisions made by a rotating cast of owners and chief executives over the course of many years.

Struggling Again

Now, less than 18 months out from its bankruptcy exit, Red Lobster is struggling once again, with 2025 marking another money-losing year and its new owners — a group of lenders who took ownership through the bankruptcy — growing hesitant to fund ongoing cash needs at the 538-restaurant chain.

The company’s current CEO, Damola Adamolekun, has been on a publicity spree to promote Red Lobster to younger and more diverse audiences, generating media buzz that hasn’t translated into sufficient restaurant sales.

Inside restaurants, Adamolekun launched a Red Carpet Hospitality initiative and revamped food offerings as part of efforts to help boost traffic. He trimmed the menu by 20%, keeping cheddar bay biscuits and other classics while adding items such as bacon-wrapped scallops, lobster bisque and spicy seafood boils, as well as eye-catching happy hour specials.

Although endless shrimp would be an extension of these operational efforts, the chain remains heavily burdened by structural and financial issues, including those onerous leases at chronically unprofitable locations and aging restaurants in need of upgrades.

Red Lobster has been working with advisors to try to renegotiate many of those leases and reduce the earnings drag of unprofitable locations, people with the knowledge of the matter have said.

Adamolekun has repeatedly cited the financial support from Red Lobster’s owners as a key factor in its turnaround, and suggested in a January interview with Bloomberg Businessweek that, if that commitment wanes, his to the company may too.

“Part of my role is to show this is a business worth investing in,” he said. “Now, if I make that case, and I believe it, and I’m not getting a positive reaction? Then, you know, this is at-will on all sides.”

Ronalds-Hannon writes for Bloomberg.