The rise and fall of Red Lobster

A $2.7B seafood empire killed by a $20 shrimp deal — but the real rot started when private equity sold the restaurants back to themselves.

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By The Numbers

$2.7B

peak revenue annually

$530M

write-off by Thai Union

$37M

cash at bankruptcy

What They Nailed Early

Built the first mainstream seafood brand for middle America. Hit massive scale — $3.8M per location at peak. Cheddar Bay Biscuits became iconic. General Mills fueled explosive growth from 21 locations to over 1,000.

What Changed

Parent company Darden shifted focus to Olive Garden and Longhorn. Stores got neglected, menus went stale. Then PE owners Golden Gate sold the real estate for $1.6B, saddling Red Lobster with $190M annual rent. Thai Union bought in, cut out competing shrimp suppliers, then allegedly pushed an endless shrimp promo that torched margins.

Where it Landed

Chapter 11 bankruptcy. Thai Union wrote off $530M. Guest counts down 30% since 2019. New owners trying to rebuild, but slow-casual seafood remains structurally tough.

The Principles

Reinvestment isn't optional. Neglected stores and stale menus show up as traffic declines years later, even if the brand once dominated.

Vertical integration can hide conflicts. When your supplier owns you, their incentive is selling more product — not your profitability.

Structural headwinds compound execution mistakes. Seafood costs outpaced inflation 3x while fast-casual ate casual dining's lunch. Great runs can still flip hard.

Builder's Takeaway

3 silent killers that wreck restaurant brands:

•

Deferred maintenance shows up as traffic loss — invest in the experience or watch customers drift

•

One 'traffic promo' can torch a year's profit if unit economics don't work

•

Tight balance sheet plus rising fixed costs equals no margin for mistakes

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