Red Lobster Bankruptcy: Was Viral ‘Endless Shrimp’ Loss to Blame?

Red Lobster filed for Chapter 11 bankruptcy on Monday, the American restaurant chain announced late Sunday — just days after closing nearly 100 locations in the aftermath of a costly 2023 decision to make $20 endless shrimp a permanent menu item. 

For Context: The company’s plans to declare bankruptcy and sell itself to lenders had been previously reported. The recent restaurant closures led to a viral burst of somewhat sensational news coverage, including the Washington Post (Lean Left bias) headline, “If Red Lobster’s butter-bathed ship is sinking, remember the shrimp.” Dubbed “an American Seafood Institution” by The New York Times (Lean Left bias), Red Lobster was founded in Florida in 1968. 

Blaming the Shrimp: Headlines sometimes differed on tying the bankruptcy to the “disastrous” shrimp promotion, as CNBC (Center bias) called it, with both CNN Business (Lean Left bias) and Fox Business (Lean Right bias) highlighted the connection. The New York Post (Lean Right bias) joined in, focusing the first several paragraphs of its article on “the shrimp fiasco” and the influence of a Thailand-based seafood company.

Other Factors: On the other hand, Fast Company (Lean Left bias) explicitly minimized the shrimps’ impact, placing the blame on “changing market dynamics, consumer preferences, and, more recently, inflationary pressures.” This echoed the argument of a May 1 Business Insider (Lean Left bias) article, which blamed the “debt-laden” company’s struggles on “waning customer interest, constant leadership turnover, and, as has become a common tale, private equity's meddling in the business.”