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On Sunday, the seafood chain statement The company has filed for Chapter 11 bankruptcy protection. Red Lobster said its restaurants “will continue to operate normally during the Chapter 11 bankruptcy proceeding.”
“That’s a shame (sigh). I have fond memories of eating at Red Lobster a long time ago,” Musk said. ×post on monday.
The whimsical billionaire ×post By podcasters and writers Chun Fandetailed Red Lobster’s financial problems.
Representatives for Musk and Red Lobster did not immediately respond to requests for comment from BI sent outside of normal business hours.
The seafood chain is best known for its “Ultimate Endless Shrimp” promotion, which has been running for over 18 years. As part of the deal, customers could now eat as much shrimp as they wanted for just $20.
Last summer, the company decided to turn its limited-time menu into a permanent menu. This meant customers could get their shrimp fix every day.
The move ultimately backfired spectacularly, with Red Lobster reporting an operating loss. $11 million and $12.5 million They are scheduled for Q3 and Q4 of 2023, respectively.
Ludovic Garnier, chief financial officer of Red Lobster investor Thai Union Group, told investors in November that the promotion was “one of the main reasons for the losses incurred in the third quarter of 2023.” He said that there are two.
Red Lobster eventually raised the promotional price to $22 and then $25.
“If anything, the Endless Shrimp deal is probably a symbol of desperation or bad business, or both,” Jonathan Mays, editor-in-chief of Restaurant Business Magazine, told BI’s Emily Stewart. .
Red Lobster’s near-bankruptcy comes at a tough time for the restaurant industry, as companies struggle to attract customers amid rising costs of living.
In July, McDonald’s Chief Financial Officer Ian Bowden told investors that customers were ordering less and switching to value menus to save money. He said this was due to a “challenging macro environment, including rising interest rates and rising costs.”
“Consumers are fed up with prices. Everyone is fighting to get fewer consumers, or certainly consumers who come to the store less often,” Borden said in an earnings call last month.
The same goes for Starbucks, whose CEO Laxman Narasimhan said last month that the coffee chain’s performance “did not meet our expectations.”
“Many clients are becoming more strict about where and how they spend their money, especially now that most of their stimulus savings have been spent,” Narasimhan said.