Shareholders say the former controlling owner pushed the 2023 promotion and related shrimp supply deals in ways that benefited Thai Union as Red Lobster's finances deteriorated before its 2024 bankruptcy.
Red Lobster shareholders are suing former controlling shareholder Thai Union, alleging the seafood producer used the chain's "Everyday $20 Ultimate Endless Shrimp" promotion and related supply arrangements to extract value while worsening the restaurant company's financial position. The suit, filed in May in Orange County, Florida, says Thai Union pushed to make the long-running seasonal offer a permanent menu item in 2023 and sought to make itself Red Lobster's exclusive shrimp supplier, moves that shareholders say left the chain losing money on the promotion, short of shrimp in restaurants and later burdened with oversupply. The complaint says the campaign contributed to an $11 million quarterly loss tied to the promotion and was expanded even after Red Lobster's finances began to deteriorate. Red Lobster later raised the price from $20 to $22 and then $25 before dropping the offer in 2024. The chain filed for Chapter 11 in May 2024 after also facing a difficult macroeconomic backdrop and tougher restaurant competition, and had already defaulted on a $275 million term loan from Fortress Investment Group in September 2023. Shareholders say they are owed millions and are seeking to unwind about $32 million of 2023 transactions they allege Thai Union pressured Red Lobster to enter into. Red Lobster emerged from bankruptcy in September 2024 after closing about 130 locations and cutting about 10% of its corporate staff, and later reintroduced endless shrimp on a limited-time basis.