On Monday, the venerable, Beyoncé-endorsed seafood chain declared bankruptcy.
Red Lobster has been struggling for a while. It was sold to private equity firm Golden Gate Capital in 2014 for $2.1 billion and then bought out by the seafood supplier Thai Union in 2020. Thai Union is one of the world’s largest seafood conglomerates. Thai Union also owns Bumblebee Seafood and is a major tuna producer, as well.
In the previous decade, it was the subject of several claims of human rights violations, including the use of slave labor in its shrimp supply chain, as well as sourcing issues with its tuna production.
For what it’s worth, Thai Union appears to have made significant strides to improve its image since 2015, adopting several new labor and seafood sourcing transparency initiatives, bringing shrimp production in-house where it has greater oversight, and committing to programs like the Global Ghost Gear Initiative.
Thai Union produces a lot of shrimp. As owners, Thai Union became the exclusive supplier of shrimp to Red Lobster. In order to attract crowds following the pandemic closures on 2020/2021, Red Lobster began offering unlimited shrimp for $20.
If you believe the headlines, customers ate so much shrimp that they drove Red Lobster into bankruptcy, posting $11 and $12 million losses in the last two quarters, People love eating unlimited shrimp, and the media is a glutton for a good seven deadly sins story. Though, oddly, seating was still 30% below what it was before the pandemic, so perhaps it was less the volume of shrimp and more the lack of customer volume that drove those losses.
I can eat a lot of (sustainable) shrimp (from well managed fisheries). My friends can eat a lot of (sustainable) shrimp (from well managed fisheries). The Southern Fried Science readership can eat a lot of (sustainable) shrimp (from well managed fisheries). There’s no way we could eat a $2 billion restaurant into bankruptcy. And, of course, we didn’t.
What really killed Red Lobster was its owners selling the land underneath Red Lobster restaurants to itself and then renting it back to Red Lobster at an enormous premium, saddling the restaurant chain with a massive financial liability while guaranteeing that the owners could extract rent from the franchise regardless of its profit margins.
Marketing gimmicks aside, there is no such thing as unlimited shrimp. Not all shrimp fisheries are well-managed, bycatch is especially high in the industry, and there’s currently an ongoing outbreak of early mortality syndrome in Asian aquaculture facilities.
It’s probably not a great year to eat cheap shrimp by the bucketful.
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