Red Lobster staff have spoken out publicly about the “miserable” workplace atmosphere and blamed Thai bosses for the demise of the world’s largest seafood chain.
The company confirmed Sunday that it has filed for Chapter 11 bankruptcy protection after closing nearly 100 restaurants across America.
It has struggled in recent years with rising rents and labor costs, as well as promotions such as the iconic all-you-can-eat shrimp deal that backfired.
Now, former employees of the seafood restaurant chain are claiming that majority owner Thai Union contributed to a toxic work environment and destroyed Red Lobster.
“It was miserable working there for the last year and a half I was there,” said Les Foreman, vice president of the West Coast division CNN.
Red Lobster staff have spoken out about the ‘miserable’ workplace atmosphere and blamed Thai bosses for the demise of the world’s largest seafood chain
Foreman, a former Red Lobster executive, worked at the company for 20 years before being fired in 2022.
“They had no idea about running a restaurant business in the United States,” he said.
Thai Union blamed the pandemic and “ongoing industry headwinds, higher interest rates and rising material and labor costs” for the problems Red Lobster has faced.
But former employees claim it was the bosses’ incompetence that led to its demise.
They said dozens of Red Lobster leaders with a deep understanding of the brand were fired or resigned and Thai Union replaced them with its own executives.
A former leader claimed that Thai Union CEO Thiraphong Chansiri visited the chain’s headquarters in 2022 and brought along a feng shui consultant.
He said the consultant determined that the Orlando offices were “bad Feng Shui and no one should use them,” and that they were later left vacant.
Red Lobster’s former employees said the work environment at the headquarters became toxic and demoralizing before interim CEO Paul Kenny took over in 2022.
According to a source, Kenny allegedly made derogatory comments about Red Lobster employees and criticized them during meetings.
A previous executive alleged that the former CEO commented on a woman’s weight at a conference in Dallas two years ago.
“We need to set up a training program in this company,” he reportedly said.
According to the company’s bankruptcy filing, Red Lobster also cut two of its longtime shrimp suppliers to buy more from Thai Union at a higher cost.
Thiraphong Chansiri, CEO of Thai Union – the majority owner of Red Lobster – at one of the company’s factories in Thailand
“Thai Union exerted excessive influence over the company’s shrimp purchasing,” Red Lobster alleged in the document.
But Thai Union said the allegations were “meritless” and looked forward to the “full disclosure of the facts.”
Former employees claimed they were pressured by Thai Union representatives to buy more seafood from their company.
‘Our suppliers were really angry about that [Thai Union representatives] were in those meetings with them,” one person said.
There were numerous changes in the restaurant business that led to a decline in sales.
It started leaving shrimp tails in pasta and eliminated sauté stations, according to a former employee.
Servers were also asked to cover ten tables instead of three, and a host was removed from the entrance during the lunch hour.
Barry Fulghum, who rose to become dishwasher operations director at Red Lobster in the 1970s, said, “There would be times when we had one or two people on the kitchen line.
“What those cooks did on the line was amazing considering the staffing situation they faced.”
The company confirmed Sunday that it has filed for Chapter 11 bankruptcy protection after closing nearly 100 restaurants across America
According to bankruptcy filings, Red Lobster lost $11 million after introducing its $20 “endless shrimp” promotion.
The offering, which launched as a permanent part of the menu last June, is virtually identical to a 2003 deal – and the problems it caused are virtually identical too.
Kenny was warned that $20 wasn’t enough to make a profit, a former employee said.
The seafood restaurant chain said in a lawsuit that it has more than 100,000 creditors and an estimated net worth of between $1 billion and $10 billion. The company’s estimated debt is between $1 billion and $10 billion.
The bankruptcy filing was signed by CEO Jonathan Tibus, a corporate restructuring specialist who took the top position at Red Lobster in March.
Restaurant liquidator TAGeX Brands announced last week that it would auction off equipment from more than 50 Red Lobster locations that recently closed.
The store closures span 21 states, reducing Red Lobster’s presence in cities such as Denver, San Antonio, Indianapolis and Sacramento, California.
Workers at the Thai Union Frozen food processing plant outside Bangkok clean and prepare freshly cooked shrimp
Maintaining stability at the Florida chain has been problematic due to multiple ownership changes in its 56-year history.
Earlier this year, Thai Union Group, co-owner of Red Lobster, announced its intention to withdraw its minority investment in the dining chain.
Thai Union first invested in Red Lobster in 2016 and increased its stake in 2020.
At the time of the January announcement about its plans to divest, CEO Thiraphong Chansiri said the COVID-19 pandemic, industry headwinds and rising operating costs had hit the dining chain hard and were causing “long-term negative financial contributions to Thai Union and its shareholders’ had caused.
For the first nine months of 2023, the Thai company reported a $19 million share of Red Lobster’s losses.
Red Lobster’s roots date back to 1968, when the first restaurant opened in Lakeland, Florida.
The chain has grown rapidly since then and has more than 700 locations worldwide.
However, the company was forced to file for bankruptcy after the $25 “endless shrimp” promotion.
The offering, which launched as a permanent part of the menu last June, is virtually identical to a 2003 deal – and the problems it caused are virtually identical too.
Back then it was “endless crab.” It was great for hungry seafood lovers, but a disaster for the restaurant — by the time it pulled the plug after just seven weeks, Red Lobster had lost $3.3 million.
“It wasn’t the second all-you-can-eat experience, it was the third” that hurt profits, a Red Lobster executive told analysts at the time in 2003.
This time the deal was also hugely popular, with some customers sticking around for hours to see how much they could eat. One girl achieved 108 in four hours.
“I set a new record at my local Red Lobster, this is my greatest achievement in life,” the poster explained in her video.
More people started taking advantage of the offer than the company expected. But instead of completing the deal, bosses kept it going for six months – and the losses dwarfed the amount lost on endless crabs 20 years earlier.
Seafood lovers devouring plates of shrimp were the main reason Thai Union lost $11 million in just three months, shortly after the deal started.
Former employees of the seafood restaurant chain claim majority owner Thai Union contributed to a toxic work environment and destroyed Red Lobster
Ludovic Garnier, financial director, said: ‘We knew the price was cheap, but the idea was to attract more visitors to the restaurants.
“So we wanted to increase our traffic, but it didn’t work.
“For those who have been to the US recently, $20 was very cheap. And the reason for this promotion was to say that we knew the price was cheap, but the idea was to attract more visitors to the restaurants.
“But something that was different from our expectation is that the proportion of people who selected for these promotions was much higher than expected,” he added.
Simply put: it was too cheap. Hospitality experts are surprised that the chain did not realize how badly things could go wrong, especially because they repeated a mistake.
“In today’s environment, consumers want to find value and stretch their budgets where they can,” Jim Salera, restaurant research analyst at Stephens, told the LA Times.
“For $20, it is entirely possible for a consumer to eat well beyond the very small profit margin.”
The price went to $25 and then $27, but losses mounted. The following quarter, the company lost $12.5 million. The total costs for Thai Union have been much higher.
Endless Shrimp had been available at Red Lobster for twenty years, but was only offered for a few weeks each year.
But Thai Union made it a permanent fixture on the menu last June.
The Bangkok-based seafood company’s bosses saw it as a way to sell the thousands of tons of shrimp it caught in Asia — and also to drive traffic to the Red Lobster restaurants it now owns in the U.S., where the number of customers decreased. They saw it as a win-win situation.
“If you were a big shrimp company based in Thailand, that would be a good idea,” a former Red Lobster executive told CNN.
Endless Shrimp started at $20 but was too popular and cost millions of dollars
It wasn’t profitable at the $20 price point, or even when they put it on the market.
And it has seriously affected the service. Restaurants had long wait times as customers sat at tables for hours and, of course, ate shrimp.
Chansiri said in November: “We expected a 20 percent increase in customer traffic, but the actual number was up to 40 percent.”