Author丨Zhu Zhishan
On May 19, local time, Red Lobster, a well-known American seafood chain restaurant, filed for bankruptcy protection.
Major media in the United States have reported this matter in a prominent position: the restaurant that has been with them for generations may be about to collapse.
In its bankruptcy filing, Red Lobster listed assets of $1 billion to $10 billion, estimated liabilities of $1 billion to $10 billion, and more than 100,000 creditors.
The main reason for Red Lobster's bankruptcy is the rising rent and labor costs. And the $20 “eat any shrimp” promotion accelerated its collapse. Last year, Red Lobster lost 11 million US dollars in three months, most of which was brought about by "eating shrimp casually" - American foodies are also very good!
Former employees believe that the rising rent and labor costs are only part of the reason, and that Red Lobster's failure to keep up with the market is the root cause of its decline. Red Lobster's marketing and promotion methods, service quality, menu innovation, restaurant upgrades, etc. have all stagnated.
Red Lobster was founded in 1968 by well-known caterer Bill Darden. The birthplace of Red Lobster is not in a seaside city, but in Lakeland, a small inland city in Florida. Darden's idea is different from ordinary people: If you can succeed in selling seafood in inland cities, not only can you copy it without geographical restrictions, but you can also avoid many competitors.
In 1970, Red Lobster was acquired by the food giant General Mills (the parent company of Haagen-Dazs and Wan Chai Pier). Injecting the resources of the giant, it began to rise in the 1980s and opened more than 400 stores, which later spread to almost every state in the United States. In 1995, General Mills packaged its restaurants such as Red Lobster and created Darden Restaurants.
Darden Catering is known as American Haidilao and is known for providing high-level services.
In 2014, Darden Restaurants sold Red Lobster to the well-known private equity giant Golden Gate Capital for US$2.1 billion. The sale of Red Lobster gave Darden Restaurant Group a net gain of $1.6 billion.
In 2016, Golden Gate Capital sold 25% of Red Lobster's shares to Thailand's Thai Wansheng Group, which started out as a canned tuna company.
In 2020, Golden Gate Capital sold the remaining 75% equity of Red Lobster to Taiwansheng and two catering industry investors. At this point, Red Lobster has been completely taken over by Taiwansheng. At the time, Red Lobster had more than 700 stores in the United States. Former employees of
criticized Taiwansheng Group for excessive cost cutting, which violated Red Lobster's long-standing principle of "you get what you pay for" and damaged the brand.
Under Tai Wansheng's management, Red Lobster continued to lose senior executives. Since 2021, there have been five CEOs. What is very exaggerated is that in 2021 and 2022, new CEOs, CMOs, CFOs and CIOs were replaced, and all these people ran away within two years.
In the summer of 2023, the "Eat Any Shrimp" changed from a limited-time offer to a permanent offer, which was seen as the last straw for Red Lobster. American netizens have said that their shrimp-eating records in life are constantly being refreshed at Red Lobster. Netizens also continue to share "instructional videos" on how to eat the most shrimps on TikTok, doubling the cost of Red Lobster.
In 2003, Red Lobster once held a crab leg-eating campaign. As a result, diners flocked in and suffered heavy losses. The CEO at the time was forced to resign. Tai Wansheng either knew nothing about the matter or was overconfident.
Red Lobster has relaxed the restrictions on "eat any shrimp". It originally hoped to use it to attract traffic and bring sales of other dishes. But, after eating enough shrimp, who wants to eat anything else?
Some people in the industry said that the "Eat Any Shrimp" activity is not impossible. If you make your own shrimp product supply chain, that's no problem because you can control costs.
Earlier this year, Taiwanson said it would divest from Red Lobster and assume a $530 million investment loss.
Red Lobster’s bankruptcy has sounded the alarm that casual dining is in decline in the United States. Casual dining's share of total restaurant industry sales has declined from 36% in 2013 to 31% in 2023. Casual dining is not fast food, but a type of formal meal. Friends gatherings, taking the children out for a meal on weekends, and couples dating all fall into this category.
However, Red Lobster is not completely dead yet. If someone takes over, there is still a chance to be reborn after the reorganization.
This article does not constitute any investment advice.
